Corporate Taxes

I’ve been saying this for years as well:

corporations don’t pay taxes — they collect them. Any taxes are actually paid by customers (higher prices), employees (lower wages), shareholders (smaller returns), etc. The ideal corporate tax rate is therefore zero, but politically that would never fly. Instead we have a tangled mess of corporate tax law, which benefits large corporations with their armies of lawyers and lobbyists. Small corporations which can’t afford all that are put at a competitive disadvantage, not to mention sole proprietorships which pay through the nose on everything.

But since we can’t get an ideal corporate tax rate, a flat and transparent corporate tax would be the next best thing. Our current system is the worst of all possible worlds: It diverts resources and manpower away from investment and innovation, and stifles entrepreneurs to the benefit of established interests.

On the other hand, our system creates endless possibilities for corruption and graft. So it has that going for it. Which is nice for Washington.

One other point: People are saying that most of the benefits of the tax bill go to the upper percentage. Ignoring the fact that you can’t cut taxes without cutting them on the people who pay the most taxes, cutting corporate taxes in fact effectively reduces indirect tax costs for all the people above, who are in all income brackets (particularly the employees and customers). As I wrote years ago, we can’t cut taxes, we can only cut (or increase) tax rates.

7 thoughts on “Corporate Taxes”

  1. Focusing on who wins and loses in the tax reform is getting in the way, the current tax code is that much of a mess. We need to cut the Gordian Knot, and write a clean tax code, ignoring the old one.

  2. Can you show me ANY studies that when corporate tax rates were cut that employees got pay raises? Every study I have seen as pointed to the exact opposite. Shareholders benefit and upper management REALLY benefit.

    http://www.epi.org/press/corporate-tax-cuts-will-not-increase-wages-for-working-families/

    Corporations use infrastructure not as individual tax payers but as the corporate entity so they should have to contribute taxes to pay for it. Since Mitt said corporations are people too then those “people” can contribute to replace the wear and tear on roads, bridges, sewage systems etc.

    1. Wear and tear on roads and bridges should be paid for by gas/fuel taxes. These are already and always will be paid by corporations that use the roads since they buy the fuels.
      Sewage systems and other utility costs should be paid by usage fees. Again corporations already pay those fees.

      1. I doubt we would ever not have taxes on businesses, especially at the local level where taxes are often more closely associated with specific activities of the state.

    2. Every study I have seen as pointed to the exact opposite. Shareholders benefit and upper management REALLY benefit.

      That was part of the point. Shareholders suffer under higher taxes. As to whether or not a tax cut leads directly to a worker getting a raise is a different story because taxes are just part of the calculation in determining wages and wages are just one of many concerns pulling the money a company has. It shouldn’t be overlooked that hiring more workers isn’t a wage increase for everyone, but it is a very important increase for those new workers.

      It isn’t a good argument that giving your staff an extra dollar an hour is more beneficial to the working class as a whole than creating more jobs at the same wage.

      And isn’t the socialist argument that upper management always gets more money regardless of tax rates or the health of the company? If that is a constant, can it be brought up here as justification for fighting the democratization of tax rates?

    3. Since Mitt said corporations are people too then those “people” can contribute to replace the wear and tear on roads, bridges, sewage systems etc.

      They are groups of people and they do have the right to speak out about policies that will affect them. Democrats always want to silence their victims but notice when it come to groups of people in business, activism, or both speak out and take actions in support of the Democrat party, everything is not only cool but should receive special treatment from the government.

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