What is the point of corporate tax? Watch

liaente
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I just don't get it. Why would you tax a company?
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MidgetFever
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Why tax anyone by that logic? :rolleyes:
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willtj78
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To fund all the government bodies that regulate and facilitate all of the trade of that company??
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BanditMir16
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Corporate Tax is a tax levied by the government to extrapolate a levy from the gain of income. So basically, the same reason we pay income tax. Because legally, a corporation is its own legal entity, it must pay its own tax. These taxes fund the NHS, the Police, the army and all the other institutions we need to keep us safe and to provide a social security net. Currently, UK corporate tax is 19%, in 2010 it was 28%. If the Tories win, by 2024 it will be down to 17%, and if Labour win, it will be 26%*.

* Labour will band corporate tax like how we do income tax. So small companies will pay 21% and large 28%. (based upon profit margins posted per annum).
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liaente
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(Original post by willtj78)
To fund all the government bodies that regulate and facilitate all of the trade of that company??
Doesn't the owner of the company do that?
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liaente
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(Original post by BanditMir16)
Corporate Tax is a tax levied by the government to extrapolate a levy from the gain of income. So basically, the same reason we pay income tax. Because legally, a corporation is its own legal entity, it must pay its own tax. These taxes fund the NHS, the Police, the army and all the other institutions we need to keep us safe and to provide a social security net. Currently, UK corporate tax is 19%, in 2010 it was 28%. If the Tories win, by 2024 it will be down to 17%, and if Labour win, it will be 26%*.

* Labour will band corporate tax like how we do income tax. So small companies will pay 21% and large 28%. (based upon profit margins posted per annum).
That's interesting and helpful, thank you. So basically there is corporate tax for the people who own the company because that's essentially their income and we must all pay tax so government can make sure we get what we need?
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BanditMir16
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(Original post by liaente)
That's interesting and helpful, thank you. So basically there is corporate tax for the people who own the company because that's essentially their income and we must all pay tax so government can make sure we get what we need?
Yes. Basically, we give the government a portion of our money (less if you are poor, more if you are rich), and the government redistributes that money to provide basic services and help the most needy in society. But remember, it's not a tax on the CEO or owner, but on the business itself. Because businesses in corporate and tax law are technically their own legal individuals. (That's why they are allowed to donate to political parties).
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martin7
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(Original post by BanditMir16)
Corporate Tax is a tax levied by the government to extrapolate a levy from the gain of income.
That's not correct. Corporation tax is essentially a tax on companies' profits, not their income.

More details on the Government's website: https://www.gov.uk/corporation-tax

(Original post by liaente)
That's interesting and helpful, thank you. So basically there is corporate tax for the people who own the company because that's essentially their income and we must all pay tax so government can make sure we get what we need?
Corporation tax is a tax on the business; it's nothing to do with payments to the people who own the company (except in so far as it reduces the money available to be paid out to the owners). Corporation tax is paid by the business, not its owners.

If a business does make payments to its owners (typically in the form of dividends), then it's that payment that the owners might have to pay tax on -- but that would be income tax because the payment to the owners counts as their income.
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Jack22031994
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(Original post by liaente)
Doesn't the owner of the company do that?
The owners money and company's money arent the same thing.
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Other_Owl
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Are you a Tory MP?
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BanditMir16
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(Original post by Other_Owl)
Are you a Tory MP?
HAHAHA! Don't be so disrespectful! Where I come from, being labelled a Tory is worse than AIDS!
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BanditMir16
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That's what I meant. "Corporation tax is essentially a tax on companies' profits, not their income.", sorry if it was gargled. More difficult to explain to someone who has no clue than I thought.

(Original post by martin7)
That's not correct. Corporation tax is essentially a tax on companies' profits, not their income.

More details on the Government's website: https://www.gov.uk/corporation-tax



Corporation tax is a tax on the business; it's nothing to do with payments to the people who own the company (except in so far as it reduces the money available to be paid out to the owners). Corporation tax is paid by the business, not its owners.

If a business does make payments to its owners (typically in the form of dividends), then it's that payment that the owners might have to pay tax on -- but that would be income tax because the payment to the owners counts as their income.
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