The Biden Administration Corporate Tax Proposal

The Biden Administration Corporate Tax Proposal Discussed In Today’s Podcast:

1) The Biden Administration Corporate Tax Proposal and History of the Corporate Tax Rate
2) More on the $10,200 Exemption for Unemployment Benefits. Some states don’t conform.
3) May 17th just for individuals and NOT for the 2021 1st Quarterly Estimated Tax payment.
4) People have been getting letters asking for a completed Form 15111 from the IRS to prove Earned Income Tax Credits. The form was not included in the letter. It was not on the IRS website. That seems to have been fixed as I found it. Credit to Tax Mama in L.A. on Twitter https://www.irs.gov/pub/irs-pdf/f15111.pdf

5) FTB Form 3853 on California Health Insurance Penalty. The instructions are 18 pages!!! Shame, Shame, Shame!!!
https://drive.google.com/file/d/1OyVFSB3LgCK_vNBnVnSeghjwdD0cVTSn/view?usp=sharing

Greenstein Rogoff Olsen & Co
rcohen@groco.com
510-797-8661
www.groco.com

Details:

1) Tax revenue by source history

“The first federal income tax was enacted in 1861, and expired in 1872, amid constitutional challenges. The constitution did not allow the taxation of income. George Washington was very clear that income should not be taxed A corporate income tax was enacted in 1894, but a key aspect of it was shortly held unconstitutional. In 1909, Congress enacted an excise tax on corporations based on income. After ratification of the Sixteenth amendment to the U.S. Constitution, this became the corporate provisions of the federal income tax.[13] Amendments to various provisions affecting corporations have been in most or all revenue acts since. Corporate tax provisions are incorporated in Title 26 of the United States Code, known as the Internal Revenue Code.
In 2010, corporate tax revenue constituted about 9% of all federal revenues or 1.3% of GDP.[15] The corporate income tax raised $230.2 billion in fiscal 2019 which accounted for 6.6 percent of total federal revenue and had seen a change from 9 percent in 2017. [16]

President Reagan and others: The corporate tax is not borne by the corporation. It is passed-on in the form of higher prices to consumers and/or to shareholders in the form of lower dividends. It is a dead drag on the economy.
Others say: Corporations have so much power and influence over the political system and technology that they are entities on to themselves, in some cases more powerful than governments. They have to be taxed.
You decide!

Plus, it is not that simple…if you have a high rate, but allow a lot of deductions and special exemptions and subsidies for foreign activity, the effective cash rate of taxes is lower. What is the TAX BASE the rate is applied to???

In all things, WHAT IS THE COMPARABLE??? China’s rate (before how they compute the tax base the rate is applied to) is 25%.

Average Africa: 27.46%
Average Asia: 21.55%
Average EU: 20.271%
Average Europe: 18.98%
Mexico: 30% with lots of deductions and exclusions and inflation adjustments.

When your tax rate is higher than others, business is sucked right out of your country. That’s a fact! Just as Ross Perot said in the 1990’s: https://www.youtube.com/watch?v=xQ7kn2-GEmM

California Corporate Tax Rate is 8.84% AND has World Wide unitary rules….it got so bad, we went to a Single Sales Factor and a Waters’ Edge Election….that’s a whole different podcast day.

28%, if enacted, is still way lower than 35%, but not as good as the 21% current flat rate. I’ve sat in the Board Room meetings. NOTHING impacts economic growth like a lower tax rate. Some disagree.

2) More on Unemployment Benefits:

13 States are not conforming to the Federal exemption of $10,200 of Unemployment Benefits: https://www.cnbc.com/2021/03/30/10200-unemployment-tax-break-american-rescue-plan-states-giving-the-exclusion.html

Thankfully, California has always 100% exempted Unemployment benefits from taxation.
ID, CO, MN, KY, MS, GA, SC, NC, WV NY and Maryland tax them. Yikes!

Ron Cohen,

CPA, Partner at Greenstein, Rogoff, Olsen & Co., LLP  CPAs & Advisors
Email: rcohen@groco.com
510.797.8661

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