Cam, excellent point about the profile of the equity owner. Something like 75% of all equities in the US are owned not by individuals but by institutions. Most have their own buyside analysts and are light years more sophisticated than the retail investor. But our integrated disclosure system protects everyone despite the compliance costs involved.
You have convinced me on the point that a huge disparity between corporate and personal taxes wouldn't work. Nothing like the tax code to change individual behavior.
Does an owner/employee just pay themselves a dirty great big wages cheque and reintroduce as capital (if they want to grow the business rather than withdraw cash), rather than have positive profits and retained earnings in the company?
There's the rub. The corporation owner pays himself a salary of $49,999, expenses it at the corporate level so he pays no tax, then reintroduces the same dollars in the form of additional equity investment in the company. It only works if he has the control necessary to do it, however. We also have flow-through entities here- the partnership, which "flows through" the profits of the enterprise to be taxed at the marginal rates of the individual members of the partnership-- and our LLP and LLC, and "Subchapter S" corporation qualify for the same tax treatment. We would either have to eliminate those entities from the code, or run the risk that our corporate tax collection would be a lot lower than expected due to the loophole.
Hmm, this flat tax stuff requires quite an overhaul of the way we do things. What started out as a political bait has become a global finance discussion!
Hmm, I'm looking out the window at the Empire State building from 42 floors up wearing a necktie that's too tight, you are writing a prospectus wearing a t-shirt! What does it take to get a Visa to work THERE?
