Business IncomeTaxes (a Government Finance Issue)

Introduction

Business income taxes are far more complicated than personal income and investment taxes. For business income taxes you need to keep track of a lot of different expenses and determine which ones can be deducted when computing how much profit a company has made. Therefore, since I am not an expert in business accounting nor in business taxes, I will need to leave most of this up to the experts. However, there are a few things that I think must be done.

First off, many companies pay little or no income taxes. If a company really did not make a profit, then that should be okay. However, if they did, then they should always pay something, so there should be a minimum income tax.

Every business, whether a for profit or non-profit business, should pay taxes that pay for the protection and regulation that the government needs to provide. This could be based on some combination of net worth, expenses, and gross income.

Even if a business is non-profit, it should still file a tax return showing expenses and revenue. If too much of its revenue goes towards expenses instead of towards the charitable work it is set up to do, then it should lose its non-profit status and be forced to pay some appropriate income taxes.

All businesses that are headquartered or operate in the United States should pay taxes on the profit they make in the United States. Profit earned in another country should be taxed by that country instead of the United States even if the profit is brought to the United States.

However, it can be complicated determining which expenses and incomes should be attributed to operations in each country. Therefore, a business should report all expenses and incomes broken down by country. This way we can see if the ratio of expenses and incomes for each country is in line with what should be expected. If not and the business cannot adequately explain the discrepancy, then we should adjust its income taxes accordingly.

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