My Views on Corporations & Taxes

I understand why CEOs of public corporations take advantage of every opportunity to condemn taxes. The lower the tax rate, the greater the after tax profit. The greater the after tax profit, the greater the share price. The greater the share price, the closer they come to or exceed “their number”. You know, the number. The share price times the number of shares they effectively own when everything is awarded and vested. It is the number they need to be able to live the life they want to become accustomed to.  After all, the ONLY reason you take the job as CEO of a company you were not a founder of is for the money. Period end of story. Lower taxes puts more money in your pocket.   If you want an example of how corporate tax rates are important to CEO wealth, just look at how often public companies manage their effective tax rates to move their earnings per share numbers.

I can tell you with complete confidence that when a company’s stock is moving, for whatever reason, the CEO (and most employees with a lot of effective stock ownership) is marking to market his/her  holdings and calculating his net worth AT LEAST once a week if not more.  Stock is up 10pct,  big smile. Stock is down 10pct. , don’t let your dog near him/her.

So we know why every CEO claims that lower tax rates are critical. But does it really impact how their companies are run ?

1. Competition has a far greater impact on operating a business than the tax rate

Does the tax rate have anything to do with the business’s ability to compete ? Some may argue that if the tax rate is lower, the company may have some more cash to compete with. But then so would the competition. So that argument doesn’t hold up.

The reality is that most industries are a dog fight. You have competition and you crush your brain and those of everyone around you looking for ways to get an edge. If you find a way to better compete, you are going to leverage whatever resources you have available to you in order to do so.  You are not going to look at your tax rate first. You are not going to avoid making a decision because your taxes are TOO DAMN HIGH. You are going to do what you can to compete. Taxes be damned. Rule #1 of business is to stay in business.

 

2. Companies hire because they need people to compete and keep customers happy, not because of lower tax rates

The same principle applies to hiring. It is incredibly expensive to hire people. You hire people because you need them. You don’t hire them because your taxes are lower. You don’t hire them because you just repatriated cash from a foreign country.  You hire them because you have a specific need for them. They are going to help you become more profitable, more productive, more competitive, whatever the reason. No one hires people simply because they have some more cash in the bank.

3. Companies invest their cash because its strategic

I wonder if Amazon hesitated in developing and releasing the Fire because they were concerned about corporate tax rates ? I wonder if Dish looked at corporate tax rates before they determined the strategic value of buying spectrum. Think Apple looked at tax rates before it decided to open their stores ? Did McDonalds bring back McRibs because the tax rate was low enough ? Companies make strategic decisions every day.  They invest because they want to grow the company. They invest because they are competitive and they want to win. They invest because they want to make more money. They don’t invest because they just had their tax rates lowered.

4. The exception that proves the rule

Not all capital allocation is strategic. Some is purely financial. There are those that look to buy and invest in companies on purely a financial basis. These are the financial engineers. There is a place in the country for financial engineers.  There is a place for those who invest in companies and try to make them more efficient and productive in hopes of getting a sufficient return on their investment either through the return of capital from the company or from the sale or IPO of a company. Nothing wrong with this. And every single financial engineer will also tell you that tax rates are important. The tax rate impacts their  cash returns. While these guys may have big pockets to lobby for lower taxes, the reality is that they are a tiny, tiny percentage of companies and jobs. And trust me, they are not going to use lower taxes to increase employment.  They are there merely to goose returns.

Bottomline is that while CEOs of public companies and financial engineers have good reasons to ask for lower taxes, I don’t see lower taxes creating jobs.  I am not suggesting that increasing taxes is a good thing for companies. That is a topic for another day.

53 thoughts on “My Views on Corporations & Taxes

  1. Pingback: Can someone please explain corporate taxes to me?

  2. Pingback: Taxing the rich will it really work? - Democrats, Republicans, Libertarians, Conservatives, Liberals, Third Parties, Left-Wing, Right-Wing, Congress, President - Page 14 - City-Data Forum

  3. I could’nt agree more with you, wonderful post really.

    http://www.rijbewijshalen.net

    Comment by afvallenzonder -

  4. The problem with all your examples in point 3 is that those are large companies with a lot of capital so how much of their profits they keep is not as important. I invest in the small cap world and for many of these companies there is often more projects or growth initiatives to invest in than available capital. If they keep more of their profits due to lower taxes, then they have more money to invest in more of their projects to grow their business. Investing in more projects often means hiring more employees to work on these projects.

    Comment by zachmcadoo -

  5. I agree with Mark – lower taxes won’t stimulate hiring. But they do affect marginal decisions about where to do business, who to hire, offshoring, replacing people with technology, etc.

    Particularly, payroll taxes and other per-employee mandates and regulations discourage hiring and incentivize bad employer behavior. For example, banks are replacing tellers with ATM machines. This is good for customers, good for business. If you are a bank you either follow this trend or get acquired or put out of business.

    Right now, technology and productivity is moving faster than demographics, so people are out of work. Government could at least slow this trend by reducing the cost of hiring. As Mark said, hiring is expensive. What government can do is reduce the marginal costs and risks of hiring tax-paying Americans who would otherwise be collecting unemployment and creating other social problems.

    Comment by econovan -

  6. Pingback: Dallas Mavericks Owner on Taxes and Patriotism | Tax Trials

  7. I came back to this blog by accident. In reviewing the comments I’m struck by what appears to be the two divides of the issue. Yes, we are talking about taxes, so that’s what the discussion is about, but you have opinions that either come from entrepeneurial slant or a technical cash management slant. Guys like Mark are entrepeneurs. They think in terms of markets, customers and solving needs. Big ideas. Technicians (I am one), while making valid points, are tinkering at the margins. The entrepenuers are talking about dollars. Technicians tend to step over the dollars to pick up the pennies. Again, we have our place, but just cause I can count beans doesn’t mean I could see the need for them. Much less produce them and sell them. It took me awhile to be content in being a good field Lieutenant to a first class entrepneur. Now I’m happy to be along for the ride, but I know who rings the cash register.

    Comment by mjmclane1952 -

  8. Mark,

    An associate at HBS blogged about companies needing to stop competing on being the best and instead to be unique. You definitely need to differentiate from competitors but if you’re competing to be unique then don’t you need to be the best in that unique market??

    What are your thoughts?

    http://blogs.hbr.org/cs/2011/11/stop_competing_to_be_the_best.html

    I apologize for commenting to this post but all the relevant posts were closed for comment.

    Comment by ysadka -

  9. Mark, I’m really sorry, I had no idea that the twitter links would paste in so absurdly large. Thought they’d be simple links. If there’s a way to edit those to be less real-estate intensive, I gladly will.

    Comment by scafaria -

  10. Lowering Taxes does create jobs when investor confidence is high. Lower Taxes leads to higher earnings, leading to a higher share price, which leaves the investor with an increase in the value of his/her portfolio. With his portfolio doing well, this investor will be willing to spend more, creating more jobs. The corporation (both private, and public) will be able to invest and expand with more cash on hand, creating more jobs. Higher earnings CAN result from this and as a result more taxes paid the next year.

    The public corporation will be in a more advantageous position because it can now issue more shares at a higher share price, along with a lower tax rate. The private corporation will be able to expand because it too has a lower tax rate. With the growing importance on corporate social responsibility, more earnings could contribute to charitable donations. Most importantly, a lower corporate tax rate will attract foreign businesses and investment which will in turn create more domestic jobs. I almost always agree with you Mark, but not on this one. After reading one of the above posts on how the government spends the tax money, it is clear to me that corporations can do a much better job of passing profits on to the public than the government can.

    Comment by postman5 -

  11. Insightful post. Based on the contents of this post, I wonder about the recent bill which was recently signed into law by President Obama that provides for tax breaks to companies that hire veterans. As a new veteran and someone who works with veterans, I find this act to be encouraging but wonder if it does not address larger barriers to veteran employment.
    A trend which I have been observing among veterans looking for work is a lack of certification for skills in which they have been trained. For instance, a Navy Corpsman or Army medic who has 10 or 15 years of intense experience cannot utilize that technical skill in the civilian world without first obtaining new certification. The same is true for other technical fields (aircraft mechanics is one that comes to mind). Certification for safety oriented professions is certainly wise. However it seems redundant and cumbersome to force highly experienced professionals to obtain a new, basic certification to continue to work in their industry, outside the military, especially in the case of aircraft mechanics, the certifications as often a federal mandate.
    It would seem to me that this is an unnecessary bar to employment that could be addressed at the federal or state level and would have a great impact on veterans seeking work.

    Comment by douglasfrench -

  12. Pingback: Simoleon Sense » Blog Archive » Weekly Roundup 154: A Curated Linkfest For The Smartest People On The Web!

  13. After researching Government Grants I didn’t know if I should laugh or cry. As I read the Grants offered all I could think is what the Hell! This is what our American tax dollars pay for?
    Below I have listed 2. There are 100’s like this.

    Project to Combat Exploitative Child Labor in Ethiopia
    Labor Affairs will award up to $10 million for a technical assistance project(s) to support efforts to eliminate all forms of exploitative child labor within the geographic locations of Addis Ababa and the Gamo Gofa and Wolaita Zones Department of Labor, Bureau of International exploitative child labor in Ethiopia.

    Tunisia: Supporting a Democratic Transition-U.S. Department of State announces an Annual Program Statement (APS) competition for proposals supporting Tunisia�s democratic transition, which includes the drafting of a new constitution, to assist the Tunisian people. award $20,000,000

    Wouldn’t it be a great concept if the government would invest that $30,000,000 in funding the American people who have amazing ideas. There are endless resources, organizations, and learning tools for researching a business plan so many that it becomes confusing for business illiterates like myself. I was blessed to work for a corporation for 29 years and retire with great benefits and enough to get by on. I am concerned for our children and the
    challenges they face in finding jobs. I have what I think are great ideas for a business they will stay in my head till I get a patent, find a mentor, or get my son to major in business instead of Meteorology. I also know
    Ideas are like — —– everybody has one.
    Mark, I really enjoy reading your articles. There great!
    Thank you!

    Comment by debsaunders -

  14. Taking capitol out of the market with all taxes there is a dead weight loss

    Comment by realnathanh -

  15. 99% rate not knowing if You woul make a return on investment you would be less likely to invest. It is the same as going to the horse race track the worse investments ate given hire odds a bigger payback. The higher the tax level the lesser the payback the less likely one is to invest. This lack in investment leads to less growth.

    You talk as if profits are Gauranteed profits are not gauranteed. Therfore tax rates do effect investment.

    Comment by realnathanh -

  16. Mark

    First I not okay with how you hastily generalized all CEO’s that sounds ignorant and does nothing to help you pursade your point. You are a billionaire CEO and don’t act that way and to say ALL CEO’s get involved with a business is purely for $ there is not one out their you might choose their job for money and the type of business I don’t beleive that.

    2nd
    To say taxes do not effect competition may be true but taxes decently effect labor cost and hiring. Labor is only hired because of a need and a firm will only hire to where marginal cost equal marginal benefit corparate taxes take private Capitol out of the market as with all taxes there is a dead shrift loss. This dead wieght loss is felt by both producers and consumers. Without corporate taxes corporation would produce more at a lower price the rise on production would correlate directly to more employment.

    3rd when some invest their money they look at risk reward as with every free market investment profits are not gauranteed. If you where taxed at a 99% rate

    Comment by realnathanh -

  17. Pingback: Repatriating Overseas Funds Won’t Create Jobs | dailyMuckraker

  18. Hi Mark,

    First, love reading your stuff. Always makes me think and I’m particularly fond of the stories on how you made your money. I tend to agree with you but I don’t think I can fully on point #2. I’d say you’re absolutely correct on your initial point: companies hire people because they need them. Certainly, companies don’t lobby for a tax reduction, get it, and then go on and hire people just because of it. It seems likely to me, however, that it is entirely possible for a company that has found a need to hire people to not be able to do so because of too high a tax burden. Is that not realistic? I think it is.

    Comment by Robert S -

  19. First off Mark, I was wondering if I could get your advice and it would really be much appreciated. I just started my own web venture and im having a lot of trouble getting people to the site and i really dont have any money to advertise. Any suggestions? The site is called storeator, http://www.storeator.com , and it allows users to compare an item on different websites. If you do get a free chance to spare some advice, i check your blog regularly so a reply here would be awesome or you can use the contact on Storeator or my WordPress Acount.

    Secondly, the issue i think that also needs to be addressed is in the end, if a business makes X amount of dollars, there will be that X amount no matter where it goes. So the issue i raise is whose more, qualified i think is the right word, to spend that X amount of dollars. If tax rates are raised, we are basically intrusting our government to use that money wisely, with lower tax rates we are intrusting the company. On one side you have government social services such as unemployment checks, welfare, social security etc and on the other you have companies hiring, work insurance, pensions, etc. Where oh where is the money better off? ;-P

    Thanks

    Comment by sundawg559 -

  20. Mark, off the subject, but many of us would like to read your thoughts on the Penn St scandal.

    Comment by money4nuthin -

  21. Corporations and the top 1 percent’s successful pursuit of profits is a great thing, but in order to combat the tragedy of the commons we must also directly tie their fate into the fate of the country. Why not tie corporate tax rates to a multiple of the poverty rate. And have this money set aside by the government to be managed and deployed by a certain subset of corporate leaders (spent in ways to lower poverty). And if they are better able than the government to manage this money to lower poverty, then their tax rates will decrease accordingly. So for example, if the poverty rate in the US is 20%, with 20% of the people under the poverty line, then the corporate rate would be taxed at, let say 3 times the poverty rate…making their tax rate 60%. In this way they will have a vested interest in lowering poverty in the US. And as they find creative ways to help lower poverty in the US they save on their taxes, enabling people to spend more and everyone benefits. So if they then invest (their creative genius) to lowering poverty to let’s say 5% then they would only get taxed at 15% and the lower rate they pay in taxes would be offset by more people being out of poverty who are now paying more taxes.

    Comment by explainynot -

  22. Pingback: WCNTV Commentary on Mark Cuban’s Views on Corporations & Taxes « blog maverick | WCN TRANSMEDIA GROUP

  23. Do the words DEAD ON BALLS ACCURATE Mean anything to you. Mark spent the last 30 years perfecting and learning from you and others. We need to connect to monetize HD.Net and solve this NBA mess with a Trandmedia Brandcasting Technology approach. http://www.linkedin.com/in/wcntv I am that close you changing the Global Economy. Google me.

    Comment by wcntransmedia -

  24. you’re correct in saying taxes *usually* are not the impetus behind strategic developments for public corporations, however that issue can play a significant factor in determining whether or not initiatives to grow the businesses actually happens.

    it’s true that if company A gets a tax break that their competitors, B and C, will get them also. but it’s not necessarily true it will effect B and C like it effects A. if company A has cheap access to capital then it’s not as big of a deal for them to have those tax breaks comparatively to B and C.

    there are companies for which raising money is prohibitively expensive. usually they are companies who are either just starting to grow and prove themselves or companies who are in a decline and trying to revive their business. either way, the life of the company is often dependent on whether or not funding can be found. it’s not a good place to be. “we need money to survive, but because our survival isn’t assured money is expensive to come by”.

    i know you spoke of just public corporations but i want to point out the impact it has on private businesses too. over 90% of the economy consists of privately held businesses. out of those 90% most are small to medium sized private businesses where acquiring money isn’t as easy as issuing more shares or as cheap as issuing corporate AAA paper. the tax rates, both up and down, are felt more by these companies than by corporations. these are the companies that hire workers in every town and city across the states. public corporations post impressive profit numbers in the billions but they don’t hire in every town and hamlet across america. the private business backbone of america supports and enables those huge corporations to survive. to only focus on how public companies would be effected and downplay the importance of the other falling economic dominoes is short-sighted.

    Comment by ll8054 -

  25. This is one of the dumbest arguments I’ve ever seen by someone of the stature of a Mark Cuban. I am completely stunned.

    Corporations (US) are struggling in a GLOBAL economy. We’re not competing with the guys in the building next door, who in all likelihood share my tax rate. (Really, Mark?!)

    Profits, and profitability in general, are very tight these days, in most industries. One or two percentage points can easily mean the difference between a profit and a loss, and often does. Does the tax rate affect that number? Absolutely.

    Comment by joes8888 -

  26. Mark,

    I respect your accomplishments as a businessman and as the owner of a world championship basketball team. However, you are missing the mark in your argument.

    The question is not about the competitiveness of an individual enterprise on the micro-level; rather, it is about the competitiveness of US-based corporations on the macro-level.

    We no longer live on a large island, secluded from the rest of the world. We live in a world in which a product can get from any one spot to any other spot in the world within 48 hours, and very often sooner.

    Given this rapid ability to distribute, from anywhere to anywhere, the corporate leader must use Global comparisons when deciding where to locate a new production space, back office, marketing facility, etc. When factoring-in the costs of building and completing a facility, many variables are considered: Local building costs, labor costs, tax incentives, tax rates, access to raw materials, distribution, political climate, etc.

    While many point to labor costs as the chief reason that jobs have moved overseas, I and many other corporate leaders would at least partially disagree with that. While labor costs are lower, certain inefficiencies with regard to work attitudes, cultural norms, attention to detail, and other factors quickly offset the savings in those areas. The greatest weapon that a location possesses in order to lure a business to relocate is the amount of income that must be paid to the government for “rent,” which is essentially the “cost of doing business” there.

    The US government taxes its citizens on worldwide income. It cannot do the same to corporations, however, so money earned overseas is not taxed until it returns to the USA. This is why corporations currently hold in excess of $1 trillion in overseas cash reserves. If these funds could be repatriated without corporations having to surrender 35% to the government, US corporations would have a massive amount of money available for domestic expansion.

    Corporations do not pay taxes in a real sense, because taxes, just like any other cost of doing business, add to the consumer price of the corporation’s products and services. If corporate taxes dropped to zero, consumer prices would decline, and more products would be sold. This would create jobs, and more jobs means more tax revenue to the government.

    Our current tax system is flawed, out-of-step with reality, has too much favoritism (thank you lobbyists), and does not effectively balance the impact of taxes between individuals. It needs to be changed. Herman Cain, Ron Paul, and Rick Perry all have good alternatives. None is perfect, but a change needs to come.

    As an aside, I enjoyed watching you on Shark Tank. The show resembles the work I do on a daily basis at http://lngnetwork.com.

    Have a great day!

    Comment by Randall Parker, MBA -

  27. I have a similar, complementary view on the topic:

    http://politicalmoderation.wordpress.com/2011/07/28/taxing-the-job-creators/

    Comment by Gary Murphy -

  28. –”More importantly, why don’t the same people that argue for lower corporate taxes also argue that reducing, if not eliminating, taxes on lower income earners such as factory workers, would be beneficial to them? If we were to excuse all lower income workers from paying taxes (both income AND payroll taxes), then corporations could pay their workers substantially less and these laborers would be more competitive with the cheap labor overseas. What’s wrong with this logic? So why aren’t corporate leaders screaming for lower taxes on the working class? If anything, wealthy corporate leaders are demanding higher taxes on the working class. This does not compute to me.”–

    Actually, many people – including corporate leaders – support eliminating/reducing payroll taxes. I think that anybody who supports lower corporate taxes would also support lowering taxes on the working class. Your only error in this is imagining that those who want lower corporate tax rates must want higher taxes for everyone else.

    Comment by Steve Cronk -

  29. You make some good points, but I don’t think many smart economists are suggesting that companies fail to undertake big investments because the tax rate is 5% higher. It’s more complex than that.

    Ultimately, the question is whether you think money in the hands of a private shareholder will be more or less productive than in the hands of government. If a shareholder gets money, she’ll either spend it in the economy (leads to economic growth), save it in a bank who lends to businesses to grow or stay in business (leads to economic growth), or invest it (leads to economic growth).

    If government gets that marginal dollar, they can pour it into any number of programs, most of which are unproductive. It could be spent on a subsidy for a politically-connected business that crowds out better private companies, used to strengthen our military presence in foreign countries, or spent on maintaining the massive bureaucracy. I have more faith in the private sector to be productive, so I support lower corporate tax rates.

    Keep in mind: Rarely is the dilemma, “Should we hire?” or “Should we expand?” More often, it’s “Where should we hire?” and “Where should we expand?” If other countries have substantially lower corporate tax rates, then the marginal investment is going to occur overseas. You can’t have the 2nd highest corporate tax rate in the world and then become irate when companies decide to focus their growth in other places.

    Comment by Steve Cronk -

  30. There is much irony in what we as Americans say we want and what we actually do. We say we want American jobs, but we encourage/support corporate decisions to use cheap foreign labor because, well, we love a microwave that costs us $19.95, not an American made one for $39.95. Tie a corporate tax rate to the percentage of product/labor they use domestically. The more use of US labor the lower their tax rate.

    Comment by Bad Bad Leroy Brown -

  31. It’s always so interesting to hear Mark’s opinion because I feel like there’s never a bias. It’s like he’s only looking out for the american people. Great Article! :D

    Comment by lindseyjonesmakeup -

  32. Your plainspeak is always refreshing Mark. Politicians are just too interested in the collective psyche which blurs them from seeing clearly.

    Comment by markkolier -

  33. Any chance you would ever run for elected office?

    Comment by signalwarrant -

  34. “I don’t see lower taxes creating jobs” – - that’s in your concluding comments yet that seems to be at root of the labor stoppage your Mavs are engaged in at present. So, how do your views and that of your fellow NBA owners get reconciled?

    Comment by neonwalrus -

  35. I find it interesting that some people argue that lower corporate taxes would make the US a more attractive country to build a factory in. How much does the location of factories factor into where corporations pay their taxes anyway? Surely it is the location of the HQ that affects the tax rate more than the location of manufacturing facilities? Is the argument rather that businesses will relocate their HQ overseas, like say to a PO box in the Bahamas or in Ireland, to avoid paying their share of running America? Or alternatively, is the argument that tax incentives should be used to lure companies into the country? While I’m not sure of the legality of tax incentives, I still don’t see how this has anything to do either negatively or postively with the corporate tax rate.

    More importantly, why don’t the same people that argue for lower corporate taxes also argue that reducing, if not eliminating, taxes on lower income earners such as factory workers, would be beneficial to them? If we were to excuse all lower income workers from paying taxes (both income AND payroll taxes), then corporations could pay their workers substantially less and these laborers would be more competitive with the cheap labor overseas. What’s wrong with this logic? So why aren’t corporate leaders screaming for lower taxes on the working class? If anything, wealthy corporate leaders are demanding higher taxes on the working class. This does not compute to me.

    Comment by grantcv1 -

  36. Regarding stock in a company and one’s net worth, I actually didn’t monitor my daily net worth with my previous company. My excel spreadsheet monitored my daily net worth.

    One could even argue that only the best and most efficient companies can effectively compete with taxes. Taxes actually causeing an increase in competition by weeding out the inefficient ones.

    I do think tax incentives cause companies to allocate resources to certain areas. In oil and gas, tax incentives are in place to allow a greater risk to be taken on wells drilled, with certain costs eligible for a right off wether the well is dry or successful. The incentives are actually one of the principle problems in pure competition, by giving an unfair advantage to companies that have the best lobbyist.

    Good blog!

    Comment by davis6774 -

  37. Taxes unquestionably impact investment decisions.

    1. To begin with, when people talk about lower taxes helping business they are mostly referring to international competition, not competition within the US where everyone faces the same tax rate.

    If you are going to build a plant and the tax rate in the US is higher than in some foreign country, all else being equal, you are going build it in the foreign country because your after tax returns will be higher.

    2. Not all companies generate sufficient free cash flow to make all the investment they would like to make. Lower tax rates mean more free cash flow and the potential for more investments and grwoth.

    3. Implicit in lower taxes is lower government spending. Now granted, in this country we are delusional enough to think we can grow spending faster than the rate of economic growth forever. But in a fiscally prudent emotionally mature and well run country lower taxes would eventually translate into lower government spending (it could still grow but it would be lower than it would be otherwise). That means capital allocation would be transferred from the public sector to the private sector and probably get a better return. That would lead to more jobs and faster growth because it would invested instead of consumed.

    Quite honestly Mark, if these are your thoughts on taxation, then there must be more luck to mega business success than I thought.

    Comment by ludwigvonmises -

  38. Agree with you Mark.

    ’nuff said.

    Comment by phopcroft -

  39. I suspect that too many folks are tying political agendas into their business strategies and thus losing focus on what their real business strategies are. Of course things change as we all know but a business person understands this. I will say that I chose to bring our start-up bootstrap venture to Austin as the market for what we are building is most advantageous. But I did check in to tax rates (corp, personal) before choosing to relocate to Austin. Mr. Cuban is correct about one of his key points and that is the fact that taxes have zero effect on our future hiring plans. However, all costs are considered as we dive headfirst into our start-up. If a state, city or county is willing to provide tax breaks, it does factor into our decision process but not to the point that we totally walk away from strategic markets in order to receive tax incentives. It’s a factor but small enough to not control our directives also important enough to consider and analyze.
    JN/CS

    Comment by crippledshark -

  40. Main Street has been losing equity for the past decade. Coincidentally, right around the time that wall street and their “investors” got into the home mortgage gambling business while the U.S. Government and the Federal Reserve stepped off is when this losses started to occur.

    The economy is suffering because local economies are being snuffed out the tremendous damage being done by the massive amounts of foreclosures. Foreclosures that would not be happening at the rate of 3,000 to 10,000 a day if the government and the federal reserve were first in line taking responsibility.

    http://swarmthebanks.blogspot.com/2011/11/why-did-pension-fund-managers-invest.html

    Comment by alexlogic -

  41. How about eliminating tax shields for corporations? Even though we are taxing corporations their are many loop holes for corporations. For the ones that pay for lobbyists to bend the rules on the tax laws are the ones benefiting. They are then gaining the competitive advantage over the competition bending the rules in their favor.

    Comment by imontemayor1 -

  42. Finally! If you haven’t yet, can you please go on TV and say this stuff? I’m so tired of hearing one republican politician after another cramming it down our throats that lowering corporate taxes equates to some sort of direct injection of job creation. Or that raising corporate taxes will kill jobs. Both BS conservative scare tactics that, unfortunately, voters believe. Taxes aren’t a primary decision driving factor for a CEO.

    Comment by rleslies -

  43. I had a conversation recently with another entrepreneur and someone-else about point #2. The someone-else just didn’t believe us at all! This particular person was right-leaning, and arguing for lower taxes in the current economy.

    If I need to hire someone to get a job done and make more money, the tax rate is not even in the discussion.

    Comment by Tom -

  44. Valid points, all of them. However this is coming from a man who has more money than most of us will see in our lives times 1,000. I’m fairly certain Mark was much more concerned about taxes when he was in bootstrap start-up mode than he is today. As a business owner who has sweated payroll and those darn 941 payments along with trying to figure out how to get healthcare for my employees and cut costs to remain competitive (amongst hundreds of other issues); I can honestly say that taxes of any type were/are issues that must be dealt with.

    Second point is that being a good corporate citizen doesn’t mean you continue to spend if restraint will benefit the overall good. You must look at all sides of the financial coin and develop a strong financial plan, cut costs wherever you can and optimize your money in the most effective manner possible. This rings true if you are one person trying to launch the next “broadcast.com” or if you are a billionaire with boatloads of cash.

    While some taxes do need to be raised and many more corporate loopholes need to be eliminated; there is just as much need to curtail irrelevant or redundant spending and to keep costs tightly under control as best as you can. That is just plain commonsense.

    I dig Mark’s willingness to be a good citizen and I admire what he has built from his humble beginnings in Dallas but I also know that being a volunteer to help and watching the hen house are two entirely different view points.

    Out of control spending must be reeled in along with changes in tax laws. It takes two to tango.

    Comment by crippledshark -

    • i didnt even know the tax rates when I started and ran my first business and the tax rates were far , far higher than today. I agree that healthcare costs are out of control But thats a different discussion. And yes, every business must be effective. But thats a process every smart business goes through regardless of taxes.

      I agree that you would like to see lower taxes, but lowering taxes wont change your hiring or decision processes. you are going to have to hustle the same way either way
      and im sure you are good at it !

      m

      Comment by markcuban -

  45. Mark, while I agree that CEO’s will lobby for changes that are to their benefit, you leave out an important part of the discussion regarding “does it really impact how their companies are run ?”

    Taxation doesn’t change the products, strategy, or other similar decisions within a company, but it does change WHERE a company chooses to make those investments.

    US corporate taxes are a competitive disadvantage as compared to other locales around the world. The competition within US states is further evidence – I’m in Illinois, where corporations are trying to get carve-outs from the recent corporate tax levies within our state, threatening to leave Illinois for more friendly confines.

    Taxes raise the cost of doing business, and ultimately need to come from somewhere. Raise the price, eat the costs, or lower your dividend. There is no free lunch, and for any nation/state that wishes to attract rather than repel business should take note.

    Comment by greg -

  46. Always good stuff Mark. I live in New Zealand and one of the common themes down here is that company taxes need to be lower to attract foreign investment and be competitive internationally. Obviously vastly different scale and influence but still interested to hear your thoughts on whether this is a concern for the US

    Comment by mash035 -

  47. Do you think lower tax rate would help compete globally, against China let’s say.

    Comment by mtlcharles -

  48. Great blog post. I couldn’t agree more. I always enjoy your thoughts and insights via your blog posts. Keep it coming! Great job on CNBC this morning.

    Comment by Mark Burdette -

  49. The examples you provide are public companies and I totally agree. I think private companies with a low cash flow due to high operating cost would benefit from lower taxes. Private companies definitely would benefit from lower taxes to hire employees. Publicly traded always have the luxury of issueing more stock if they need cash.

    Comment by Sapphiresut -

  50. So glad to see someone like Mark cut through the crap.

    Comment by Texrat the Crypticum Keeper -

  51. It means much more coming from the mouth of a billionaire CEO than an Occupy Wall Streeter.

    Corp CEOs only have short-term outlooks to best boost their next quarterly earnings. A 5 year vision? Maybe. 10 yr? Doubtful.

    Comment by Bad Bad Leroy Brown -

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