what are the effects of heavily taxing big corporations?

Question

what are the good and bad effects of doing this? would it be good for the middle class?

Answer 1

So much depends upon how the taxes are applied, but in general any time a heavy tax is laid upon a corporation, the company must raise prices to pay for the tax because shareholders won't accept lower profits (or so the board of directors thinks).

So, prices rise. Foreign companies can make good cheaper and so they can sneak in under the US manufacturers or producers or services. Guess what? Middle class (and lower class for that matter) jobs are lost.

Now, if the corporations pay the taxes instead of individuals, the net effect is pretty much the same. There is a limited amount of money to go around, and so people stop buying to pay their taxes.

One "good" effect of heavily taxing corporations is that it puts the burden of paying the taxes through the price of goods onto those who can afford them. So it might be considered to be an equitable tax.

Answer 2

There is no such thing as taxing a corporation.
A tax to a corporation is simply an expense.
All expenses are paid from revenues.
All revenues come from you and me and every other citizen.

In order to pay for any increase in expenses, a corporation must take in more revenue.

That is not good for anybody, including the middle class or the corporation.
.

Answer 3

The answers above are very good.

But, there is an additional reason that has not been mentioned. Yes, we tax corporations and there might be bad consequences when we do.

But, these companies distribute their profits (after taxes) to people. And, what do we do??? We tax those distributions again -- either as capital gains or as dividends!!

So, we are really taxing capitalists twice -- first we tax corporate profits and then we tax individual income that is recieved in the form of either capital gains or dividends.

Answer 4

If u heavily tax big corporatiosn, the big corporation would rise the price of theyre products and eventually a part of this taxes would be paid by the consumer and other one by the corporation....also this tax incetivate big corporations produce less and on a higher price.
If the market of the product is inelastics(the demand) all the tax eventually would be paid by the consumer.

Answer 5

It helps generate tax revenues to finance the governments activities. It errodes the profit motive of the firm. It takes away from after tax profits that could be thrown back into the company to help it expand without taking on new debt. The stockholders get a raw deal when the government takes what is rightfully theirs ( the profits of the company they own). etc.

Answer 6

Big corporations leave your country, taking jobs with them, putting their suppliers out of business, increasing price of their product for consumers.

Europe is one nice example.

Answer 7

good point - for a short time they pay more taxes.

bad point - these companies leave the US