WEBVTT - How Corporate Taxes Work 0:00:01.480 --> 0:00:04.280 Welcome to stuff you should know, a production of I 0:00:04.360 --> 0:00:13.760 Heart Radio. Hey, and welcome to the podcast. I'm Josh Clark, 0:00:13.800 --> 0:00:18.880 and there's Charles W. Chuckers Bryant over there, looking magnificent 0:00:18.960 --> 0:00:25.240 and marvelous as always, at least in my head your vision, Chuck. Yeah, 0:00:25.320 --> 0:00:27.360 we're going to see each other next week. I know, 0:00:27.560 --> 0:00:31.600 how excited are you? I am pretty on fire. I'm 0:00:31.640 --> 0:00:35.720 excited to it's it's been well over a year. I 0:00:35.720 --> 0:00:38.040 don't remember the last time we recorded together, but it 0:00:38.120 --> 0:00:42.920 was definitely I would say February probably of the last 0:00:45.440 --> 0:00:50.240 nuts we we isolated pre pandemic. We saw it coming, yeah, 0:00:50.360 --> 0:00:53.520 we did. We probably should have warned everybody, but well 0:00:54.200 --> 0:00:57.080 we didn't want to, cause, you know, a stir right, 0:00:57.320 --> 0:01:00.600 We don't like to make waves, so we knew some 0:01:00.640 --> 0:01:06.040 people would just not believe us. Um. So we're talking today, 0:01:06.120 --> 0:01:10.479 Chuck about corporate income tax, and I'm sure some people 0:01:10.640 --> 0:01:14.880 just said, well, goodbye and must stop. But I feel 0:01:14.880 --> 0:01:17.200 bad for those people, because it turns out that corporate 0:01:17.200 --> 0:01:21.240 income tax is less eye bleedingly boring than it seems 0:01:21.319 --> 0:01:24.319 on its surface. I think, yeah, I mean, I think 0:01:24.360 --> 0:01:26.199 so too. I think a lot of I mean economics, 0:01:26.200 --> 0:01:30.280 as you know, is tough for me. Uh, And there 0:01:30.360 --> 0:01:32.679 is a part everyone it's been many years since I've 0:01:32.680 --> 0:01:34.360 had to do this, but there's a part where Josh 0:01:34.400 --> 0:01:36.960 is gonna have to teach me because I read that 0:01:37.000 --> 0:01:39.600 section four times and I told Josh it sounded like 0:01:39.640 --> 0:01:43.080 physics to me. I'm I'm with you though, like, And 0:01:43.120 --> 0:01:45.160 there's a reason that I figured out all these years 0:01:45.160 --> 0:01:49.680 of us doing economics um episodes, I figured out why 0:01:50.280 --> 0:01:54.000 it's so hard to understand because a lot of it 0:01:54.160 --> 0:01:59.400 is just straight up who we like, economists are wrong 0:01:59.520 --> 0:02:03.160 about a lot of stuff, and um, they know it too, 0:02:03.520 --> 0:02:07.120 So I'm not exactly sure what they're doing to reinvent 0:02:07.280 --> 0:02:09.560 their field, but there's a I mean, it's taken a 0:02:09.600 --> 0:02:12.080 beating in the last few decades for sure. So I 0:02:12.120 --> 0:02:13.760 think one of the reasons why it's so hard to 0:02:13.800 --> 0:02:17.680 understand because it doesn't make a lot of sense in 0:02:17.720 --> 0:02:20.960 a lot of ways to Yeah, and there's economics is 0:02:20.960 --> 0:02:26.160 one of those things where you can have two very knowledgeable, 0:02:26.240 --> 0:02:31.800 well respected economists saying completely opposite things and saying that 0:02:31.840 --> 0:02:35.359 they are they are each correct, You're wrong, I'm right, 0:02:35.800 --> 0:02:41.320 And it's not like this philosophical sort of political stuff 0:02:41.360 --> 0:02:44.680 that can easily be disagreed on. It's just like no, 0:02:44.919 --> 0:02:48.000 they're they're like, no, I'm right about this economically speaking, 0:02:48.240 --> 0:02:50.119 and the other person's like, no, you're dead wrong. It's 0:02:50.120 --> 0:02:52.760 really this and then guys like us are like, I 0:02:52.760 --> 0:02:55.560 don't even know who to believe, right, And then agreeing 0:02:55.600 --> 0:02:59.160 to disagree solves nothing. It basically just punts it down 0:02:59.160 --> 0:03:01.839 the road. Yeah, don't you think that indicates that there's 0:03:01.840 --> 0:03:05.760 a fatal flaw in that science if there you know, 0:03:06.080 --> 0:03:08.200 if no one knows who's right. Well, that's like a 0:03:08.200 --> 0:03:11.160 really good point because that really comes to the surface 0:03:11.160 --> 0:03:13.919 with corporate income tax because there's a lot of people 0:03:13.960 --> 0:03:17.919 out there, typically liberal economists, who tend to think that 0:03:18.480 --> 0:03:20.640 corporate income taxes are a very very good thing and 0:03:20.680 --> 0:03:25.480 we need them, and that average American typically agrees with 0:03:25.520 --> 0:03:28.320 those liberal economists, even people who are not liberal in 0:03:28.360 --> 0:03:31.520 any way, shape or form, because the average everyday American 0:03:32.240 --> 0:03:36.640 tends to think that corporations should pay taxes as well. Um. 0:03:36.720 --> 0:03:39.760 And then there's conservative economists who say, no, this stuff 0:03:39.800 --> 0:03:42.320 is stifling business. It has all sorts of other pernicious 0:03:42.320 --> 0:03:45.000 effects that will get into um, we should do away 0:03:45.000 --> 0:03:47.880 with them alltogether, And the fact of the matter is, 0:03:48.200 --> 0:03:51.720 no one is sure who's right. Do we need corporate Texas, 0:03:51.800 --> 0:03:54.440 do they actually harm things? They don't even agree on 0:03:54.560 --> 0:03:59.680 who actually ends up paying corporate taxes. It is so 0:04:00.040 --> 0:04:02.920 um there's a lot to like kind of dig into here, 0:04:03.360 --> 0:04:05.920 which is one reason why I like it so much. Yeah, 0:04:05.920 --> 0:04:07.640 I mean, I guess we'll go ahead and get some 0:04:07.680 --> 0:04:11.839 stats on the board out of the gate. I think 0:04:11.880 --> 0:04:16.599 at ten of the countries in the world, only ten 0:04:17.160 --> 0:04:20.760 don't have some kind of corporate income tax, and here 0:04:20.760 --> 0:04:22.920 in the United States. And we'll get to how it's 0:04:22.920 --> 0:04:26.320 been over the years, but I think in twenty nineteen 0:04:26.360 --> 0:04:30.400 we've brought in about two thirty billion in corporate tax 0:04:30.480 --> 0:04:33.960 compared to one point seven to trillion from you know, 0:04:34.160 --> 0:04:38.760 people like you and I and uh now, it's about 0:04:38.800 --> 0:04:42.080 six percent of the total take, whereas in the nineteen 0:04:42.279 --> 0:04:47.960 sixties it was forty of like all taxes were paid 0:04:47.960 --> 0:04:52.239 by corporations. Yeah, and like, I mean, corporations were paying 0:04:52.279 --> 0:04:56.119 for a lot of the functioning of America at that time. 0:04:56.440 --> 0:05:00.400 What's weird is corporate profits were also higher during that 0:05:00.480 --> 0:05:03.880 time too. And I couldn't see anything any smoking gun 0:05:03.960 --> 0:05:06.520 where some economists was saying like this is the reason why, 0:05:07.320 --> 0:05:10.920 um that you know, a decline in corporate tax rates 0:05:10.920 --> 0:05:15.000 has actually led somehow to decline in profits. But I 0:05:15.000 --> 0:05:17.560 don't think there's anything in economics, especially when we're talking 0:05:17.560 --> 0:05:21.760 about huge, sweeping macroeconomics that make up one of the 0:05:21.800 --> 0:05:27.359 world's largest economies, if not the largest economy, America's. Um, 0:05:27.400 --> 0:05:29.719 it's never just one thing. There's never you don't just 0:05:29.760 --> 0:05:31.799 push one button and then it just has its one effect. 0:05:32.200 --> 0:05:34.279 You know, it's a whole bunch of buttons that are 0:05:34.320 --> 0:05:38.240 creating this one larger effect, and they're really hard to disentangle. Yeah, 0:05:38.360 --> 0:05:41.960 and Congress has been taking uh, corporate income tax since 0:05:42.040 --> 0:05:45.960 nineteen o nine when they said, quote, Congress shall have 0:05:45.960 --> 0:05:48.359 power to lay in collect taxes on incomes from whatever 0:05:48.400 --> 0:05:54.520 source derived without uh what is that apportionment? Okay, how 0:05:54.600 --> 0:05:56.760 I read the the oh, and the I switched in 0:05:56.839 --> 0:06:01.680 my mind apportionment among several states and without regard to 0:06:01.720 --> 0:06:05.479 any census or enumeration, right, which is a kind of 0:06:05.520 --> 0:06:08.000 a different thing like it used to be where if 0:06:08.040 --> 0:06:10.920 you taxed one group you had to text everybody equally, 0:06:11.279 --> 0:06:14.920 regardless of say, like if West Virginia the same population 0:06:15.040 --> 0:06:18.680 as California, but California had a lot more income. Well, 0:06:18.839 --> 0:06:22.480 West Virginia had to pay the same amount, not not percentage, 0:06:22.520 --> 0:06:25.599 amount of income tax that all the wealthy people in 0:06:25.640 --> 0:06:28.720 California had to pay, and so that kept income taxes 0:06:28.720 --> 0:06:30.960 away for a while. Which, by the way, we've done 0:06:31.000 --> 0:06:33.159 an episode on income taxes, and we also did that 0:06:33.279 --> 0:06:35.920 chapter in the book on it too. We apparently can't 0:06:35.920 --> 0:06:39.679 get enough of income taxes. Yeah, and we did a 0:06:39.680 --> 0:06:43.960 an episode on corporate personhood many years ago too, right, Yeah, 0:06:44.000 --> 0:06:46.239 which really kind of plays into this. It's the reason 0:06:46.279 --> 0:06:48.560 why a lot of people say corporations should pay their 0:06:48.600 --> 0:06:50.760 fair share. They're treated as people under the law, and 0:06:50.839 --> 0:06:53.080 people under the law have to pay taxes in the 0:06:53.200 --> 0:06:55.640 United States. That's kind of a big, a big reason 0:06:55.640 --> 0:06:57.640 why people want to see it. But yeah, it wasn't 0:06:57.720 --> 0:07:00.360 until nine nine, and I think, um, it was like 0:07:00.400 --> 0:07:03.400 you said, the sixties where that was like the heyday 0:07:03.440 --> 0:07:07.560 of corporate taxation, where the tax rates for for corporate 0:07:07.560 --> 0:07:13.200 income tax reached almost fifty three percent in the United States. 0:07:13.920 --> 0:07:17.160 It is apparently, um, the UK had a similar peak, 0:07:17.240 --> 0:07:21.680 but there's came later in two and then Australia's peak 0:07:21.760 --> 0:07:26.280 came in nine six at fort So that and that 0:07:26.320 --> 0:07:28.680 actually kind of points out something that I came across, Chuck, 0:07:28.720 --> 0:07:32.000 because there's a lot of like, um, one country will 0:07:32.080 --> 0:07:36.160 change its tax code to kind of attract foreign money 0:07:36.600 --> 0:07:41.120 to kind of get dumped into it. And which makes 0:07:41.160 --> 0:07:44.040 a lot of sense because when you dump billions or 0:07:44.120 --> 0:07:46.560 hundreds of billions of dollars from all these businesses who 0:07:46.600 --> 0:07:49.640 find your tax codes attractive, that money is now in 0:07:49.760 --> 0:07:52.600 your economy, like your financial institutions can go out and 0:07:52.640 --> 0:07:55.120 invest it, and you can do all sorts of amazing 0:07:55.160 --> 0:07:58.160 stuff with it. That's why countries have different tax codes 0:07:58.200 --> 0:08:02.600 at different times to a tracked foreign investment basically, right, 0:08:02.680 --> 0:08:05.320 which we'll get into that. I mean that's foreign investment 0:08:05.400 --> 0:08:10.000 is one name for it. Um hiding money another way 0:08:10.000 --> 0:08:14.080 to say it. Jackie channing, Uh, I don't get that. 0:08:14.120 --> 0:08:16.880 What did you do? Remember the Panama papers they revealed this, 0:08:16.880 --> 0:08:21.240 this Panama's attack haveing. The only person who was basically 0:08:21.400 --> 0:08:26.080 publicly pilloried for it was poor Jackie chan. Somehow Jackie 0:08:26.160 --> 0:08:30.040 chan ended up the face of that thing. That's terrible. Um, 0:08:30.160 --> 0:08:34.160 So you mentioned conservative and liberals. It's a little counterintuitive, 0:08:34.160 --> 0:08:38.560 but under Ronald Reagan actually um the He actually went 0:08:38.600 --> 0:08:42.280 after corporate taxes to try and increase the corporate tax 0:08:42.320 --> 0:08:47.440 amount so he could decrease US paying taxes a little bit. 0:08:48.320 --> 0:08:51.480 And in eighties, I think that was with a Tax 0:08:51.520 --> 0:08:56.600 Reform Act, they cut the rate from forty to thirty four, 0:08:57.200 --> 0:09:02.120 closed a lot of loopholes, and I think the end 0:09:02.280 --> 0:09:05.280 the end result of that was the percentage went from 0:09:05.320 --> 0:09:09.600 five percent to ten percent starting in the eighties until 0:09:09.679 --> 0:09:13.040 Bill Clinton came along. Yeah, and then Bill Clinton topped 0:09:13.040 --> 0:09:15.880 it off at thirty five percent, and there it stayed. 0:09:15.920 --> 0:09:17.880 He's just added a percentage point and there it stayed 0:09:17.960 --> 0:09:21.960 for quite a while, actually until I think two thousand 0:09:22.000 --> 0:09:26.800 and seventeen when it got slashed to one UM. And 0:09:27.200 --> 0:09:31.040 for from about to two thousand seventeen, the US had 0:09:31.080 --> 0:09:33.679 one of the higher tax rates in the world. Because 0:09:33.920 --> 0:09:37.480 it seems like there's there's always an outlier, like the 0:09:37.480 --> 0:09:42.560 the United Arab Emirates I think has Camorros in Africa 0:09:42.760 --> 0:09:46.319 has fifty, and then usually it drops down into the thirties. 0:09:46.320 --> 0:09:48.440 And there's a handful of countries in the in the 0:09:48.480 --> 0:09:51.600 mid to low thirties UM, which is where the United 0:09:51.640 --> 0:09:54.880 States was for a while until two thousand seventeen. So 0:09:54.920 --> 0:09:57.839 it looks like, if I'm reading this right, the since 0:09:57.880 --> 0:10:01.679 of the nineteen eighties, the person image of federal revenue 0:10:01.679 --> 0:10:07.280 from corporate taxes has been under ten percent. Yes, yes, 0:10:07.559 --> 0:10:10.640 which is historically low. I think it got down to 0:10:10.880 --> 0:10:13.600 one percent of g d P, which is another way 0:10:13.679 --> 0:10:17.480 to measure it. Um uh, for the first time since 0:10:17.520 --> 0:10:19.960 the very early eighties when Reagan first came in. Because 0:10:20.000 --> 0:10:24.240 Reagan slash taxes across the board in and I think 0:10:24.280 --> 0:10:27.199 he overstepped it so far that Congress is like, we're 0:10:27.280 --> 0:10:31.280 reforming corporate taxes in six there, Like you want to paycheck, 0:10:32.600 --> 0:10:37.000 right exactly, fellow congress person. Right, Uh, maybe we should 0:10:37.000 --> 0:10:39.960 take a break after that set up, you think, I 0:10:40.000 --> 0:10:41.960 think so. Yeah, it's a little early, but now we 0:10:42.000 --> 0:10:46.680 can really get into the really fun stuff. Prepare for 0:10:46.720 --> 0:11:16.240 the eye bleeding, all right, We'll be right back, okay. So, um, 0:11:16.280 --> 0:11:18.640 when it comes to corporate income tax, it's a little 0:11:18.679 --> 0:11:22.240 different than individual income tax in the US. Right. With 0:11:22.520 --> 0:11:24.640 individual income text, there are a few things that are 0:11:24.720 --> 0:11:30.120 kind of removed from your taxable income, right, like you're um, 0:11:30.280 --> 0:11:33.160 health spending account contributions, just a little stuff like that. 0:11:33.880 --> 0:11:36.200 But for the most part, you're paying like on your 0:11:36.320 --> 0:11:39.720 gross income, which makes sense because you don't have like 0:11:39.800 --> 0:11:43.000 profit and loss necessarily, although I guess if you think 0:11:43.040 --> 0:11:46.480 about it, you could just tax people on just what 0:11:46.720 --> 0:11:51.640 they have left over. They're they're, um, what's it called 0:11:51.920 --> 0:11:56.040 your something income? You know, you're you're well, yeah, you're 0:11:56.080 --> 0:12:00.880 net but income expendable income, right, Yeah, they could totally 0:12:00.920 --> 0:12:05.280 just text everybody after like housing, after healthcare, after groceries, 0:12:05.320 --> 0:12:07.480 all that stuff, just like a business. They hadn't occurred 0:12:07.480 --> 0:12:09.720 to me, but that's totally how you could do it, 0:12:09.760 --> 0:12:11.560 And they don't do it that way. I'd be great, 0:12:11.600 --> 0:12:14.880 But they do it for for corporations. Uh they do 0:12:15.040 --> 0:12:20.040 because corporations get do get text on their net and uh, 0:12:20.880 --> 0:12:22.920 you know, this is actual corporations, where if you're a 0:12:23.000 --> 0:12:27.200 sole proprietorship or if you're a partnership like an scorp 0:12:28.200 --> 0:12:31.400 or yeah, like you know that's that's not the same thing. 0:12:31.440 --> 0:12:35.000 This is only for corporations. Uh. It says here that 0:12:35.040 --> 0:12:38.640 you know, if you're like my wife's business, for example, 0:12:39.440 --> 0:12:42.960 is not a corporation. It's a small business and she 0:12:43.280 --> 0:12:47.720 pays personal income tax, so that's like sort of the 0:12:47.720 --> 0:12:51.839 pass through situation. Yeah, her companies have passed through entity. Right, 0:12:51.920 --> 0:12:54.319 so like all of the profits and all that stuff 0:12:54.360 --> 0:12:58.720 just comes right to her your individual income tax. But 0:12:58.800 --> 0:13:01.440 with the corporation, it's a its own entity. Again, it's 0:13:01.480 --> 0:13:03.920 like in the United States. I'm sure not everybody out 0:13:03.960 --> 0:13:06.560 there understands this, but the Supreme Court, starting in the 0:13:06.600 --> 0:13:08.920 nineteenth century and a few times over the course of 0:13:08.960 --> 0:13:12.640 the last hundred or two hundred fifty years, has affirmed 0:13:13.000 --> 0:13:17.800 that corporations are artificial people. They have the same rights 0:13:17.840 --> 0:13:22.880 and everything is as everyday Americans. It's nuts, it's totally wrong, 0:13:23.000 --> 0:13:26.240 and it's created all sorts of horrible problems. But one 0:13:26.320 --> 0:13:29.160 of the things that that amounts to is that you 0:13:29.200 --> 0:13:32.720 can tax a corporation. They're treated, uh, in that sense 0:13:32.760 --> 0:13:34.920 under the law as a person, but a person with 0:13:34.960 --> 0:13:38.440 special privileges. Right, And he talked about moving money around. 0:13:38.440 --> 0:13:41.800 The reason that happens is because here in the United States, 0:13:41.840 --> 0:13:44.720 they are taxed on money that they make in the 0:13:44.800 --> 0:13:49.040 United States. So if you're I don't know, like Apple 0:13:49.200 --> 0:13:52.200 or Microsoft, let's say, or any you know, not any 0:13:52.320 --> 0:13:55.440 or every big corporation, but many big corporations of them, 0:13:55.559 --> 0:13:58.839 you might want to say, hey, let's, uh, let's find, 0:13:58.880 --> 0:14:01.680 like you mentioned earlier, a country with a really friendly 0:14:01.720 --> 0:14:05.480 tax code. It's called tax in version, and let's just 0:14:05.520 --> 0:14:11.280 confuse everybody by uh using what's called transfer pricing, which 0:14:11.320 --> 0:14:16.440 is basically creating they're not fake transactions, but their transactions 0:14:16.480 --> 0:14:23.000 between subsidiaries all over the world just to move profits around. Basically, yeah, 0:14:23.200 --> 0:14:26.840 using more biblical terms, it's like robbing Peter to pay Paul. Basically, 0:14:27.360 --> 0:14:30.400 it's all like moving goods from one division to another 0:14:30.520 --> 0:14:33.480 within the same company. There's no reason that the company 0:14:33.560 --> 0:14:36.400 has to charge that division or the other division or 0:14:36.600 --> 0:14:39.320 providing a service. Like let's say you bring your marketing 0:14:39.400 --> 0:14:42.280 team into launch a new podcast. You could have the 0:14:42.320 --> 0:14:45.800 podcast division charge or the marketing division charge the podcast 0:14:45.800 --> 0:14:48.960 division front and it's all as far as the company's concerned. 0:14:49.000 --> 0:14:52.120 It's all internal money. It's all kept in the family. 0:14:52.600 --> 0:14:56.160 But all of that is just kind of right exactly. 0:14:56.160 --> 0:15:00.000 And then you're like this, I really needed that money, um, 0:15:00.160 --> 0:15:04.320 But the as far as like um, multinational corporations are concerned. 0:15:04.320 --> 0:15:07.520 When you do that and it crosses international borders, that's 0:15:07.560 --> 0:15:10.760 a really good way to move money from say the 0:15:10.840 --> 0:15:14.120 United States to say the Cayman Islands, where there's no 0:15:14.200 --> 0:15:16.840 income tax. It's one of those ten countries, And so 0:15:16.880 --> 0:15:19.040 all of a sudden, that money that you just moved 0:15:19.040 --> 0:15:21.720 from the U S to the Caymans doesn't count as 0:15:21.960 --> 0:15:26.320 profit that America can tax any longer. That's that's transfer pricing, 0:15:26.320 --> 0:15:28.560 which is a form of tax and version. There's other 0:15:28.560 --> 0:15:30.920 stuff you can do too. You can move your headquarters 0:15:31.440 --> 0:15:35.400 to another country with um a lower tax, which really, 0:15:35.720 --> 0:15:38.400 from what I can tell, basically amounts to changing the 0:15:38.440 --> 0:15:42.440 address on your letter head um and maybe some legal documents, 0:15:42.760 --> 0:15:45.720 like I think Burger King did that when they bought 0:15:45.720 --> 0:15:49.520 Tim Horton's. They basically used Tim Horton's headquarters as the 0:15:49.520 --> 0:15:52.400 new corporate headquarters for Burger King. So Burger Prince could 0:15:52.400 --> 0:15:56.360 go to school in the right district exactly right, except 0:15:56.440 --> 0:15:58.640 in this case rather than going to school districts is 0:15:58.680 --> 0:16:02.840 saving billion and billions of dollars in taxes, even though 0:16:02.880 --> 0:16:05.240 it's kind of a joke because Tim Horton's is just 0:16:05.840 --> 0:16:09.200 dwarfed by the size of Burger King. So the idea 0:16:09.200 --> 0:16:13.400 of this giant company, Burger King, transferring its headquarters to 0:16:13.960 --> 0:16:17.960 you know, relatively smaller Tim Horton's headquarters. It seems a 0:16:18.000 --> 0:16:21.880 little disingenuous, because that's the thing. Everybody knows that corporations 0:16:21.920 --> 0:16:24.720 try to get out of paying their taxes. They're just 0:16:24.840 --> 0:16:28.360 famous for it, especially in the United States. But when 0:16:28.400 --> 0:16:32.760 you come down to it, that is deeply un American 0:16:33.480 --> 0:16:37.640 and really immoral. And businesses are not supposed to be 0:16:37.680 --> 0:16:40.520 doing that. They're supposed to be paying their taxes and 0:16:40.600 --> 0:16:43.560 being upstanding corporate citizens, but they don't do that, and 0:16:43.560 --> 0:16:45.440 so every once a while they get called out on it. 0:16:45.560 --> 0:16:48.600 And one of the reasons why we still have corporate taxes, 0:16:48.640 --> 0:16:52.520 as we'll see, is because the average American, like you know, me, thinks, heck, yah, 0:16:52.560 --> 0:16:55.960 corporations should be paying their taxes just like us. Yeah, 0:16:56.000 --> 0:16:58.440 And these tax havens they cost governments a lot of 0:16:58.480 --> 0:17:01.720 money all over the world, between five hundred and six 0:17:01.760 --> 0:17:05.560 hundred billion dollars, which you know that that puts a 0:17:05.640 --> 0:17:08.639 dent on us here in the United States, but if 0:17:08.680 --> 0:17:12.080 you're a developing nation or a low income economy, it 0:17:12.119 --> 0:17:14.959 makes a real big dentu If you're losing, you know, 0:17:15.040 --> 0:17:17.560 a couple of hundred billion dollars, it's going to be 0:17:17.600 --> 0:17:20.480 a real hit to your g d P. And you 0:17:20.520 --> 0:17:25.120 know when Apple moves thirty billion dollars to Ireland over 0:17:25.160 --> 0:17:28.760 the course of four years and employees and nobody over there, 0:17:29.200 --> 0:17:31.560 and their TAXI rate of two percent, that does hit 0:17:31.600 --> 0:17:34.040 the United States, but not like it would in some 0:17:34.160 --> 0:17:38.080 other countries. Right, But again you can understand why why 0:17:38.160 --> 0:17:40.879 Ireland would be like, I think they actually made a 0:17:40.920 --> 0:17:44.400 sweetheart deal with Apple for that. Because Ireland's corporate tax 0:17:44.480 --> 0:17:47.399 is normally twelve point five percent, they knocked ten percent 0:17:47.480 --> 0:17:52.080 off for Apple. So um, but I looked at Ireland's 0:17:52.119 --> 0:17:56.520 GDP that thirty billion dollars was twelve percent of the 0:17:56.600 --> 0:18:00.240 value of Ireland's GDP in two thousand So I Land, 0:18:00.280 --> 0:18:03.520 that was an enormous influx of cash and worth whatever 0:18:03.600 --> 0:18:05.960 effort they were going to make to get it into 0:18:06.000 --> 0:18:09.240 their borders. Plus they got to make some money off 0:18:09.320 --> 0:18:12.320 of it in taxes in addition to having it invested 0:18:12.359 --> 0:18:18.399 into their economy. Um. An, Apple, like they got pilloried 0:18:18.480 --> 0:18:20.680 and kind of called out in two thousand thirteen for 0:18:20.800 --> 0:18:24.160 that that kind of transfer pricing or tax in version technique, 0:18:24.280 --> 0:18:27.960 right because they didn't have any any employees in Ireland 0:18:28.000 --> 0:18:30.080 at the time, and they got called out for it. 0:18:30.440 --> 0:18:32.439 But if you compare Apple to a lot of the 0:18:32.480 --> 0:18:36.240 other fortune five hundred companies, they are they might as 0:18:36.240 --> 0:18:39.920 well be we blows for goodness sake. As far as 0:18:39.960 --> 0:18:45.080 like paying taxes is concerned, they are ned flanders, um, 0:18:45.119 --> 0:18:48.240 just to the tea. As far as paying taxes goes 0:18:48.560 --> 0:18:52.399 compared to like companies like Amazon, it's just astounding. They 0:18:52.440 --> 0:18:54.560 should not be ever be picked on at all in 0:18:54.600 --> 0:18:58.320 that respect, just by comparison. Yeah, I mean, let's talk 0:18:58.320 --> 0:19:02.160 about Amazon. You know, they've been criticized a lot and 0:19:02.240 --> 0:19:05.639 called out a lot, especially over the past couple of years. Uh. 0:19:05.720 --> 0:19:10.119 In two thousand, seventeen and eighteen, they paid zero dollars 0:19:10.119 --> 0:19:13.840 in taxes. Uh, and they made big profits three billion 0:19:13.880 --> 0:19:17.119 dollars in profits. This isn't the gross. This is that 0:19:17.119 --> 0:19:19.440 that net profit that we were talking about that they're 0:19:19.440 --> 0:19:24.080 supposed to get taxed on. Uh. In seventeen, I think 0:19:24.119 --> 0:19:28.440 it was I'm sorry, in eighteen it was eleven point 0:19:28.440 --> 0:19:32.159 two billion dollars in profits from three billion. Yeah, they 0:19:32.160 --> 0:19:34.199 paid zero dollars in tax of both years. And not 0:19:34.200 --> 0:19:36.720 only that, check they got refunds those two years. Yeah, 0:19:36.840 --> 0:19:38.840 hundred and twenty nine million dollars and a hundred and 0:19:38.880 --> 0:19:42.280 thirty seven million dollars respectively over those two years, and 0:19:42.320 --> 0:19:45.480 then finally a couple of years ago in twenty nineteen, 0:19:45.520 --> 0:19:48.000 they were like, we'll pay some taxes. So they paid 0:19:48.040 --> 0:19:51.280 a hundred and sixty two million on the profit of 0:19:51.359 --> 0:19:58.080 thirteen point nine billion for a whopping percentage rate of one. Yeah, 0:19:58.440 --> 0:20:01.160 so in Amazon deserves to get it, you know, UM 0:20:01.200 --> 0:20:03.320 publicly berated for it. And I also have the impression 0:20:03.400 --> 0:20:06.080 that they paid those taxes in two thousand nineteen just 0:20:06.160 --> 0:20:09.840 because politically it was getting bad, like the press for 0:20:10.040 --> 0:20:12.480 it was getting kind of ridiculous. So they're like, all right, 0:20:12.520 --> 0:20:14.680 we'll pay a hundred and sixty two million. It's not 0:20:14.760 --> 0:20:18.000 even the combined refunds that we got the last two years, 0:20:18.040 --> 0:20:21.240 but at least we're paying something. Um. There are there 0:20:21.240 --> 0:20:24.760 plenty of other corporate tax sodgers. Chevron, Haliburt and IBM 0:20:24.800 --> 0:20:27.800 also paid zero dollars and taxes, and I think two 0:20:27.800 --> 0:20:31.320 thousand eighteen UM and there was a two thousand two 0:20:31.680 --> 0:20:36.320 eighteen study UM that found that of three hundred and 0:20:36.359 --> 0:20:39.440 seventy nine of the Fortune five hundred companies that turned 0:20:39.440 --> 0:20:43.159 a profit in two thousand and eighteen, ninety one of 0:20:43.200 --> 0:20:48.360 them paid zero dollars in taxes um. And I think 0:20:48.480 --> 0:20:51.280 altogether those three d seventy nine paid something like eighty 0:20:51.320 --> 0:20:55.240 six billion, when really, had they paid just the one 0:20:55.240 --> 0:20:58.360 percent that lower twenty one percent effective rate, it would 0:20:58.359 --> 0:21:01.399 have been a hundred and sixty one billion. So you 0:21:01.440 --> 0:21:04.159 can make a really good case that the corporations in 0:21:04.200 --> 0:21:06.680 America are really really good at getting out of paying 0:21:06.720 --> 0:21:09.399 taxes for the most part, even though not all of 0:21:09.440 --> 0:21:12.840 them do. And going back to Apple, Apple paid sixteen 0:21:12.920 --> 0:21:17.400 billion in taxes in two thousand nineteen compared to Amazon's 0:21:17.480 --> 0:21:22.000 hundred and sixty two million in in that same year, right, 0:21:22.119 --> 0:21:26.160 And you could also make the case that the UH 0:21:26.280 --> 0:21:30.440 tax reduction for corporations and leaving open of the loopholes 0:21:30.600 --> 0:21:33.919 did not in fact boost federal corporate tax revenue like 0:21:33.960 --> 0:21:36.800 they said it would, which never made sense to begin 0:21:36.880 --> 0:21:41.560 with anyway, exactly now it was all just a big scam, UH. 0:21:41.720 --> 0:21:43.919 You mentioned earlier though, like we still can't agree on 0:21:43.960 --> 0:21:48.600 who actually pays this. So you hear Amazon or whoever 0:21:48.840 --> 0:21:51.159 pays a hundred and twenty six what they pay a 0:21:51.240 --> 0:21:55.200 hundred six million dollars, I don't know, hundred and sixty 0:21:55.200 --> 0:21:58.600 two million, Like who actually you know, Jeff Bezos, right, 0:21:58.640 --> 0:22:00.880 a check to the federal governed want for that? How 0:22:00.880 --> 0:22:04.399 does that work? And economists don't even really agree on 0:22:04.480 --> 0:22:08.919 who ends up like taking this financial burden on. I 0:22:08.960 --> 0:22:12.359 think even in the seventeen I'm sorry, sixteen hundreds, there 0:22:12.400 --> 0:22:16.040 was an economist named William Petty, Sir William Petty, and 0:22:16.280 --> 0:22:19.280 he said, you know, kind of like what a lot 0:22:19.359 --> 0:22:21.959 of people probably think, which is it's just gonna be 0:22:22.000 --> 0:22:25.480 passed onto the consumer as higher prices. They're gonna just 0:22:25.560 --> 0:22:27.959 raise the price of their goods. Other people say, well, 0:22:28.000 --> 0:22:32.640 that can't be true, because if you're already charging prices 0:22:32.640 --> 0:22:35.960 where you've maximized your profits, you can't there's there's a cap. 0:22:36.040 --> 0:22:39.200 You can't just keep raising your prices over and over 0:22:39.200 --> 0:22:42.080 and over to cover yourself because eventually people are gonna 0:22:42.080 --> 0:22:45.120 be like, I'm not gonna buy that, right. Yeah, When 0:22:45.160 --> 0:22:47.159 you raise prices, it makes people think like, oh, can 0:22:47.200 --> 0:22:49.679 I actually afford that? And you start you start actually 0:22:49.680 --> 0:22:53.760 shooting yourself in the foot. And that's generally the understanding 0:22:53.760 --> 0:22:56.640 among economists today. You know, hundreds of years after Sir 0:22:56.680 --> 0:23:00.119 William Petty um that he was wrong and there that 0:23:00.320 --> 0:23:03.840 idea is actually born out. Among the different states in 0:23:03.880 --> 0:23:08.159 the US, some of them have zero taxes on corporate income, 0:23:08.240 --> 0:23:11.320 others have, you know, relatively high taxes on it. And 0:23:11.400 --> 0:23:13.520 yet if you go from one state to another state, 0:23:14.160 --> 0:23:16.400 when you buy a pack of Hubble Bubba bubble gum, 0:23:16.680 --> 0:23:20.720 it's probably gonna be exactly the same price before before 0:23:20.760 --> 0:23:23.960 you pay sales tax on it um, which goes to 0:23:24.000 --> 0:23:26.560 show like, you know, they're not going to charge a 0:23:26.560 --> 0:23:29.560 different price because they're having to pay corporate taxes. That 0:23:29.640 --> 0:23:33.240 just isn't the way it is. And Plus, also, corporations 0:23:33.240 --> 0:23:36.159 aren't the only ones who sell Hubba bubba, right. You know, 0:23:36.200 --> 0:23:38.600 if Emily wanted to, she could become a distributor of 0:23:38.680 --> 0:23:41.320 Hubba Bubba bubblegum. And I wouldn't blame her if she was, 0:23:41.520 --> 0:23:44.119 because it's about as good as bubble gum has ever 0:23:44.200 --> 0:23:46.240 been produced. I was a hubble Bubba kid. I was 0:23:46.280 --> 0:23:51.159 not bubblicious. I I didn't like bubblicious either, but ultimately 0:23:51.200 --> 0:23:53.240 I was bubble Yumm. And I think there are a 0:23:53.320 --> 0:23:56.960 couple of things that represent the pinnacle of human endeavor. 0:23:57.560 --> 0:24:01.959