- In 2019, the United Stated Federal Government
was expected to collect a total of $1.9 trillion
in income taxes.
Now what fraction of that $1.9 trillion
do you think comes from corporations?
- I don't know the exact number, but I'm sure
but I'm sure it's pretty small.
it's pretty small.
The majority of income in any society
is generated through the work of individuals,
not through shareholder profits.
- [Jim] Well you're right there.
Of the $1.9 trillion in US Federal income taxes in 2019,
only $225 billion, or 12% comes from corporations.
The vast majority of income tax
is collected from individuals.
- Sometimes you read press reports
saying that corporations don't pay any income taxes at all.
corporations don't payany income taxes at all.
- Well it is true that some corporations
have used clever, aggressive tax planning
clever, aggressive tax planning to pay
to pay only small amounts of income taxes.
only small amounts of income taxes.
I don't want to mentionany names but you can see
I don't want to mention any names,
but you can see some nice lists just by typing
some nice lists justby typing corporations
corporations that pay no income tax
that pay no income tax in a google search.
in a Google search.
Google itself by the way, paid $6 billion in various
paid $6 billion in various taxes
taxes to various governments around the world in 2017.
to various governmentsaround the world in 2017.
- [Kay] While we're talking about corporate income taxes,
let's talk about the big question with respect
to corporate income taxes.
corporate income taxes.
Why should corporations pay any income taxes at all?
- Well that's a good question.
A corporation is merely a collection of individuals,
people like all of us who've saved some money,
and have now invested in stock ownership.
- It's estimated that between 50% and 65% of US residents
are stockholders, directly or indirectly,
are stockholders directly or indirectly
in at least one corporation, usually through
usually through their pension fund
their pension fund or mutual fund investments.
or mutual fund investments.
The percentage varies depending on the strength
the strength of the economy.
of the economy.
- Okay, so why shouldn't corporations pay any income tax?
- Hey, I'm not making this recommendation,
I'm just saying that others have suggested it.
The reasoning is that corporate income
should be taxed only when it's distributed
only when it's distributed as dividends
as dividends to the individual owners.
to the individual owners.
- So how does it work now?
- Well now in most countries, income is taxed
- Now, in most countries,
income is taxed when it'sgenerated by the corporation
when it's generated by the corporation,
and then taxed again whenit's distributed as dividends.
and then taxed again when it's distributed as dividends.
- Double taxation?
- Yeah, double, double taxation.
- We had better learn something about corporations then,
and corporate income taxes.