Capital Markets

Economic Change We Can Believe In

To improve the economy, eliminate the corporate income tax

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President Barack Obama's stimulus proposal entails an awkward tradeoff between spending and efficiency. Fiscal stimulation suggests large, rapid increases in spending, while efficiency means cautious, modest increases. Similarly, Obama's plan favors tax cuts for low-income families, since they are most likely to spend rather than save, yet the drive for efficiency means cutting marginal tax rates on high-income consumers.

One policy change, however, can stimulate both the economy in the short-run and enhance efficiency in the long-run: repeal of the corporate income tax, which collects up to 35% of the difference between revenues and costs of incorporated businesses.

From the efficiency perspective, the corporate income tax has never been sensible policy. Economic theory holds that an efficient tax system should not tax capital income, since this distorts the incentives to save and invest. Even if the tax base includes capital income, corporate income taxation is overkill. All income earned by corporations accrues to households as dividends or capital gains, and this income is then taxed by the personal income tax system.

Proponents argue that the corporate income tax makes sense because high-income taxpayers own corporations at a disproportionate rate. This desire to redistribute income can still be achieved using the personal tax system. That approach is better targeted than taxing corporate income, since many low and moderate income households own corporations via their pensions and 401(k)s. The true burden of corporation taxation falls not just on stockholders, but on employees through lower wages and on consumers through higher prices. Thus corporate taxation hits taxpayers across the income spectrum.

Corporate income taxation has other negatives. It requires a complicated set of rules and regulations, over and above the personal income tax system, generating compliance costs. Special interests ensure that corporate tax systems favor specific industries or activities, further distorting private investment decisions. Along those lines, corporation taxation reduces financial transparency, making it harder for investors to monitor corporate behavior.

So repeal of the corporate income tax is good policy independent of the state of the economy and would provide short-run stimulus.

Repeal means higher stock prices and improved cash flow. Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers. These investments would be more productive than the ones funded by stimulus projects, since corporations respond to market forces, not to political influence. Since corporations could more easily invest out of retained earnings, repeal would also circumvent many banks' reluctance to lend.

The budgetary impact of a corporate income tax repeal—roughly $300-350 billion per year—might seem daunting, but this amount falls well short of the Obama fiscal package. The long-run impact will be less than what is implied by current revenues, since repeal will expand economic activity and therefore increase other kinds of tax revenue.

The stimulus impact of a corporate income tax repeal is likely to be substantial. Recent estimates by Christina Romer, the head of Obama's Council of Economic Advisers, suggest that tax cuts have a multiplier of three, meaning that repeal would increase GDP by roughly $1 trillion. By comparison, the administration's assumption that the government spending multiplier is about 1.5 suggests that the $500 billion in the Obama stimulus package would increase GDP by about $750 billion.

Elimination of the corporate income tax is a no-brainer. It benefits the economy in both the short-run and the long-run, with modest implications on the government budget.

The broader lesson here is that policymakers should attempt to improve the economy by eliminating currently existing bad policies, not just by adding new layers of government. By focusing equally on efficiency and stimulus, policymakers can set the stage for a sustained and healthy recovery.

Jeffrey A. Miron is a senior lecturer in economics at Harvard University.

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  1. It’s a great idea, but since it does nothing to increase the power of the Dear Leader and his acolytes in the congress, the chances of it happening are just about nil.

    -jcr

  2. This will only make the rich get richer.

  3. We should progress through printing money just like Joe said in the last thread. No taxes required.

  4. Maybe I should print some money on my work color laser printer. The Secret Service won’t mind, I’m sure. I’ll just tell them their boss gave me the thumbs up.

  5. Agreed, lets do it.

    I mean seriously, get rid of the corporate tax. After all people pay taxes not corporations.

  6. It is not fair for corporations to not have to pay taxes but everybody else has to. It is unpatriotic.

  7. Well, I can’t think of any way this wouldn’t open up a giant tax loophole for the superrich.

  8. Max is right. This is just a scheme for the superrich to get richer.

    I mean the tax thing, not the printing of money.

  9. I have never understood the point of a corporate tax. Won’t eliminating it eliminate a lot of tax evasion as well? Also, you eliminate corporations playing one state against another (assuming we can convince states to eliminate them as well). Having a more equal tax field will allow states to attract corporations based on human capital instead of tax rates. Also, raise income taxes because it is harder to offshore your income taxes. Finally, single payer healthcare, government run. That way corporations pay no health benefits and can be super-competitive. Of course the wealthy will cringe that they might have to pay a lot of taxes because we know that the only reason they get out of bed in the morning and go to work is to make a lot of money. Take some of that away and what will they do with their meaningless lives?

  10. What about Sara Palin shooting innocent animals from helicopters flown by Alaska National Guard war dodgers?

  11. Well, I can’t think of any way this wouldn’t open up a giant tax loophole for the superrich.

    The super rich already exploit every loophole imaginable, and do it very successfully. So this is just a pointless class warfarist argument.

  12. What about Sara Palin shooting innocent animals

    Sounds like a show to me. Let’s write it up, submit it to a couple of studios, and see if we can get Steve Buscemi for the sidekick.

    -jcr

  13. Episiarch, you just want to make the greatest depression since the beginning of time to be even worse so more poor people will die. Pretending that you want something else is transparent and juvenile.

  14. John C. Randolph, you sound like a crush movie freak.

  15. The super rich already exploit every loophole imaginable,

    More than that, they actually buy custom-made loopholes from their congresscritters.

    -jcr

  16. you sound like a crush movie freak.

    Nah. There’s a difference between shows I want to watch and shows that I think will make money.

    -jcr

  17. Well, I can’t think of any way this wouldn’t open up a giant tax loophole for the superrich.

    Episiarch is right. And isn’t the corporate tax a huge loophole enabling mechanism to begin with. Look at all the holding companies in the Caribbean. You gotta zero taxes in where it is hard to find loopholes-at the personal levels. If a ceo wants to skim millions in profits from his company then tax those millions. He’s going to have to leave America to enjoy his wealth.
    Love it or leave it baby!

  18. More regressive taxation will save the economy! –Reason

  19. Pretending that you want something else is transparent and juvenile.

    I am both transparent and juvenile, so you have a point.

  20. Well, I can’t think of any way this wouldn’t open up a giant tax loophole for the superrich.

    Pierce corporate veils like a knight sacking Jerusalem during the first crusade.

  21. And concurrent with eliminating the corporate income tax, end the preferential treatment of capital gains and dividends. Keep the homestead exemption on cap gains, and keep tax deffered/exempt retirement/savings(e.g. college) accounts.

  22. There is absolutely no hope of corporate income taxes being repealed, notwithstanding that the actual burden of such taxes befall either the corporation’s shareholders or it’s customers and, in fact, for that very reason.

    The government is not about to make the actual burden of its collective taxes more transparent, lest the recently impoverished feeling taxpayer suddenly realize the primary source of his impoverishment.

  23. More regressive taxation will save the economy! –Reason

    Actually, it’s “More regressive taxation will save the economy children!” –Reason Sponsors of SCHIP expansion.

  24. It requires a complicated set of rules and regulations, over and above the personal income tax system, generating compliance costs.

    Won’t someone think of the accountants?!?

  25. Well, I can’t think of any way this wouldn’t open up a giant tax loophole for the superrich

    Care to elaborate? I can’t think of any way this would do that.

  26. mark,

    a tax loophole is anything that lets someone keep more of the money he earns. we should all know this by now.

  27. The government is not about to make the actual burden of its collective taxes more transparent, lest the recently impoverished feeling taxpayer suddenly realize the primary source of his impoverishment.

    QFT!

  28. Won’t someone think of the accountants?!?

    I’m thinking they’re almost as bad as the lawyers?

  29. This is an absolute load of crap. Are we really to believe that, because we are “Losing” the loophole war against the mega rich, that we should just give up? What the hell kind of answer is that?

    Yes, lets let the companies that make RIDICULOUS profits keep even more money. That way, they can keep making a RIDICULOUS AMOUNT OF MONEY!

    ugh, the rich piss me off when they are greedy

  30. “ugh, the rich piss me off when they are greedy”

    As if the poor aren’t greedy too. They don’t shoot each other in the ghetto just for the sheer joy of marksmanship.

  31. Care to elaborate? I can’t think of any way this would do that.

    Person A sets up corporation where they receive dividends and benefits rather than income. Due to lack of an audit trail (why audit a group not taxed), you can’t separate benefits given by the corporation for business rather than personal use.

  32. The problem, Waldo, is that there aren’t even that many companies these days making profits.

  33. The way to fix it, flat tax with a high deductible. Same tax for corporations, individuals and capital gains. Tax labor and investment equally and get rid of all deductions. That’s the simplest, most difficult to defraud method.

  34. Mo-
    That’s why I’m saying ‘pierce the corporate veil’.

    This does conflict with the general raison d’etre of anti-16th amendmentite -that, above all, the income tax is anti-privacy – but I’m not an anti-16th amendmentite.

  35. They don’t shoot each other in the ghetto just for the sheer joy of marksmanship.

    Because all poor people are shooting each other in the ghetto.

    This is Reagan’s momentous achievement. Make poverty something to heap scorn onto rather than something to be overcome. And libertarians eat it up.

  36. Person A sets up corporation where they receive dividends and benefits rather than income. Due to lack of an audit trail (why audit a group not taxed), you can’t separate benefits given by the corporation for business rather than personal use.

    And I think the IRS does this all the time – when they audit *indviduals*.

    It’s the reason why the girl’s gone wild dude is currently in trouble with the revenuers, because he allegedly tried to pass off personal expenses as business ones.

  37. “But as Harvard University economist Jeffrey A. Miron writes, there is one policy change that can both stimulate the economy in the short-run and enhance efficiency in the long-run: repeal of the corporate income tax.”

    Great – except that the ideology of liberalism is all making excuses for preventing people from keeping their own money – which is what tax cuts are all about.

    And the true believers in liberalism happen to be running the show now.

  38. “The way to fix it, flat tax with a high deductible. Same tax for corporations, individuals and capital gains. Tax labor and investment equally and get rid of all deductions. That’s the simplest, most difficult to defraud method.”

    i’d be all for that, but 1) you shouldn’t give tax preference for debt and more importantly 2) you can’t tax dividends. taxes on dividends is one of the primary arguments against the corporate tax — double taxation.

  39. “What about Sara Palin shooting innocent animals

    Sounds like a show to me. Let’s write it up, submit it to a couple of studios, and see if we can get Steve Buscemi for the sidekick.”

    Almost there but it could be better.

    Have her shoot PETA members and then grind their bodies up for hog feed.

  40. How about…get rid of the income tax for those who make less then 75,000$ a year and put in the fair consumption tax. which is 5% lower then income tax. Wow you want me to go and spend my money in the economy, give me the 750$ the irs takes from me every month!

    Do you know what I could do with 750$ of my OWN money?

    The Medic

  41. and i meant to add:

    it kinds of gets to the point of whether we should try for tax overall or to tinker. i’m for overall in general, but i don’t think it’ll happen, so i’m for a second-best. even the best tinkering ideas, though, won’t get passed either, because anything that makes our tax system more efficient is derided for making the “rich richer”. unfortunately, the only people who can have their taxes cut are the ones who actually pay taxes.

  42. Care to elaborate? I can’t think of any way this would do that.

    Shift one’s income to the ledger of a sham corporation.

  43. the only people who can have their taxes cut are the ones who actually pay taxes.

    Everyone pays taxes. Or are you claiming that the income tax is the only tax that exists?

  44. Here’s the way to REALLY fix the problem:

    Actually enforce the 10th Amendment to the Constitution.

    That would cut out about 75% to 80% of total federal government spending.

    A low percentage flat rate income tax with no exemptions or deuctions could take of covering what’s left.

  45. “Because all poor people are shooting each other in the ghetto.”

    I live in the ghetto. And they shoot at each other. Every day.

    Oh, and it’s driven by greed.

  46. It’s the reason why the girl’s gone wild dude is currently in trouble with the revenuers, because he allegedly tried to pass off personal expenses as business ones.

    He probably did it poorly. Also, as a pornographer, he is going to attract considerably more federal attention (especially in the last 8 years) than your average wealthy individual.

    A corporation can legitimately cover the transportation of employees up to and including private jets. It can cover meals. It can cover “corporate retreats.” That’s just off the top of my head. There is a whole lot of personal expense that can be shifted to corporate expense with just a bit of paperwork. Quasi legal, but what’s the consequence if you get caught? Not the theoretical consequence (omg jail), the real consequence we see delivered in headlines this week: you pay the taxes you owed anyway.

    So, hey, I guess this could work if we set up a good regulatory structure to make sure people aren’t using shell companies to cheat the system. Give the government power to investigate these shell companies, and really beef up the IRS enforcement division. And put some teeth into the laws for tax cheats. I’m sure everyone here would be all for that, right?

  47. Libertarians don’t care about the little guy, only the rich, and corporations are evil! Haven’t you heard, trickle-down economics didn’t work! Buy American and hire Americans. God hates fags and foreigners, and blesses unions and apple pie. There, did I miss anything?

  48. “Everyone pays taxes.”

    not everyone. if someone, and many do, receives more in aid than they “pay” in taxes, they don’t pay taxes. and giving people more money as aid and calling it a refund doesn’t mean you’re cutting taxes. most of the taxes you’re talking about “everyone” paying is 1) sales taxes, which is collected by states and, if it is to be refunded, should be refunded by the states, 2) payroll taxes, which is presumably funding their future social security/medicare benefits, 3) property taxes, which could be directly if they own property or indirectly if they rent, and is collected by the states (I think, but i could be wrong on that), and gasoline taxes, which is supposed to be to offset the cost to the government to build and maintain the roads their cars (or the cars/trucks used to transport their food, clothes, etc to the stores). i’m sure i missed something.

  49. So president 666 is paying off his lemmings with the taxpayer’s money. I can only say to those who voted for him and will not get some loot-suckers, you’ve sold out the economic future of you and yours fo5r nothing.

    Now I want to share with you the offer of a lifetime. If you will contact my partner in Nigeria….

  50. The front page of this Web site has an ad from the Cato Institute for a global warming denial book. You may not individually all be in bed with the most corrupt political party in the western world, but your philosophy and institutions have certainly been coopted by it.

    What on earth does believing in liberty have to do with denying scientific reality?

    By the same token, what good does it do libertarians to be associated with the Republican party during the nadir of its popularity?

    I just wish you guys would argue from a perspective of liberty rather than just regurgitating the talking points of corporate-financed right-wing think tanks.

  51. The phrase “double taxation” is pretty meaningless. The only way to completely eliminate double taxation of any kind is to go to a 100% VAT tax and there are all sorts of problems with consumption only taxes as well.

    Income is taxed and then used to purchase a sales taxed item. Income is taxed and then taxed when you pay a housekeeper, nanny, gardener, plumber, Walmart employee, etc. Taxation occurs when it changes hand for various purposes all the time. If you eliminate dividend and corporate taxes, tax evasion becomes embarrassingly easy for anyone with a few hundred bucks that creates a shell corporation.

  52. Let’s end all income taxes.

  53. “the most corrupt political party in the western world”

    That would be the Democrat Party.

  54. That would be the Democrat Party.

    What’s the Democrat Party?

  55. I just wish you guys would argue from a perspective of liberty rather than just regurgitating the talking points of corporate-financed right-wing think tanks.

    Tone-deaf, are we? Why don’t you try sticking to addressing the points in the post?

  56. I’m sure everyone here would be all for that, right?

    I am, but I’m not most people. The government shouldn’t do very many things, but the things it does should be done well – and agressively. I’m a bit of a libertarian fascist.

  57. double taxation refers to when taxes are paid twice by those who earned it. for example, in the example of an llc, income is taxed once. the llc entity doesn’t pay taxes as a passthrough (unless it otherwise elects to do so). only the owners of the llc pay taxes as the income is passed through to them. the corporation is just another way to set up shop, but it pays taxes when it earns money and then those who receive a dividend from the earned income pay taxes again. why treat them differently?

    if, like you said, you tax corporations and individuals at the same rate, there is no benefit to set up the shell corp. there is no incentive to pass income and expenses back and forth to avoid taxes because you pay the taxes at the same rate in either scenario. i wasn’t saying to eliminate corporate taxes AND go to a flat tax that doesn’t tax dividends. you either do one or the other. i don’t see a flat tax coming any time soon, but i support a lower or elimination of the corp tax. as someone said, derisively, before, if the corp rate is cut, companies making lots of profits will just make more profits. that’s a good thing. executives know they can make more money in the long term by investing the money saved in taxes.

  58. “What’s the Democrat Party?”

    The most corrupt party in the western world.

  59. Tone-deaf, are we? Why don’t you try sticking to addressing the points in the post?

    I’m just fed up. I actually used to think there were intelligent libertarians. I consider myself a libertarian in some ways. But after spending time here it’s clear that you’re just a bunch of weed smoking Jesus hating Republicans, a rare breed indeed. And I wasn’t exaggerating when I called the Republican party the most corrupt in the western world.

    Anyway, the post, like most economic posts here, is ridiculous and based in fantasy. Corporations in America already pay near the lowest tax rates in the world. The entire premise of this article is that cutting these taxes will provide stimulus, a proposition that has been disproved over and over again, the consequences of such faulty thinking staring us all in the face right now.

  60. What’s the Democrat Party?

    The Democrat Party stabbed America in the back after 9/11, caused this recession (which doesn’t exist), took away your guns and are trying RIGHT NOW to make your children gay. Them and some guys named LIEberals. I’ve never actually met either a Democrat Party member or a LIEberal, but apparently they are pretty bad all around.

    Fortunately, there’s no relation with the Democratic Party. Don’t be fooled – clever wordplay is just one of the Democrat Party’s many nefarious schemes.

  61. “The phrase “double taxation” is pretty meaningless. The only way to completely eliminate double taxation of any kind is to go to a 100% VAT tax…”

    No it isn’t.

    Charge out all government services on a user fee basis and eliminate all government transfer payment programs since none of them are providing any actual service to those paying for them.

  62. “What’s the Democrat Party?”

    The most corrupt party in the western world.

    i think they’re both awfully corrupt. surely i’m not alone here.

  63. If you tax capital gains and not dividends, you skew the incentives for capital away from reinvesting in growth and to paying off shareholders. If you make capital gains and dividends tax free you skew the incentives away from labor to capital. Taxing all at the same rate causes capital to flow to where it is most effective.

  64. “Fortunately, there’s no relation with the Democratic Party. Don’t be fooled – clever wordplay is just one of the Democrat Party’s many nefarious schemes.”

    Indeed it is – because none of them are democratic – they are socialist.

  65. Charge out all government services on a user fee basis and eliminate all government transfer payment programs since none of them are providing any actual service to those paying for them.

    What’s the user fee for the military?

  66. The most corrupt party in the western world.

    Must be some minor party in Haiti or something. Though they must be pretty bad to do worse than wasting trillions of dollars and hundreds of thousands of human lives by invading a non-threatening sovereign country for a Halliburton boondoggle.

  67. “What’s the user fee for the military?”

    Divide the annual military spending budget by the entire population and send everyone an exactly equal bill for it.

    Parents would be responsible for paying their minor children’s bills.

    Nice and simple.

  68. If i was legitimately tryign to make a comprimise in congress
    What about eliminating the payroll tax?…it seems most would agree that it would help make upward mobility more feasible in this country and give help to those who need it most(it encourages employers to hire more by making it cheaper, and it raises pay for the working poor by a significant amount)…this seems like a natural comprimise between republicans who want lower taxes and democrats who want to help the poor….of course that is only if you are naive and think democrats and republicans actually want those things.

  69. What’s the user fee for the military?

    Or federal law enforcement? Or the State Department?

    Why, it’s almost as if this isn’t a very well thought out idea.

  70. Nice and simple.

    What if someone can’t afford to pay? In your America, would it be effectively illegal to be poor? And if not, why should I, a hard working America, have to pay some freeloaders Army bill?

  71. “What if someone can’t afford to pay?”

    Debtors prison – make them work it off.

  72. i think they’re both awfully corrupt. surely i’m not alone here.

    Does that necessarily mean equally corrupt?

  73. “Or federal law enforcement? Or the State Department? ”

    Same as the military – divide it up exactly equally.

  74. So the government is dissolved except for the army, and the many many federal police required to throw the poor in prison, and of course the many prisons housing those too poor to pay the prison/police/army bills.

    Wonderful world. I would love to subscribe to your newsletter.

  75. Corporations in America already pay near the lowest tax rates in the world.

    Wrong. I have a plethora of articles and studies that suggest that the tax burden on American corporations is actually some of the highest in the Western world.

    Of course, if you want to have a serious conversation you won’t dare talk about the tax rate on corporations in say, North Korea, Cuba or Burma or some such nonsense. So I’m pretty much counting on you to do it.

    a proposition that has been disproved over and over again, the consequences of such faulty thinking staring us all in the face right now.

    If all you’re going to do is repeat Administration talking points, don’t be surprised when you get called a obsequious lackey.

  76. Wrong. I have a plethora of articles and studies that suggest that the tax burden on American corporations is actually some of the highest in the Western world.

    Actually, you don’t. You have a bunch of misleading cherry-picked stats that state that our corporate tax rate is among the highest in the world, which is true. But the actual burden is quite low. And yet they still set up dummy headquarters in the Caymans.

    Just what do you think is the result of having a government run by corporate lobbyists for 8+ years? Is social good gonna just spew from the ether?

  77. “Does that necessarily mean equally corrupt?”

    that’s splitting hairs. it’s like the kobe v lebron who’s the best in the nba debates or who should be playing for the bcs championship debates. in many cases it’s a tossup. you, apparently, have an opinion, and that’s fine. to me, they’re indistinguishable.

    i vote for the political gridlock. make them play nice. as soon as someone gets things too easily, they screw it up.

  78. Just what do you think is the result of having a government run by corporate lobbyists for 8+ years?

    Umm, I think it goes much further back than 8 years. And I see no sign its stopped.

    It might almost make you think that the problem isn’t which party is on top, or corporations themselves, but, but, what could it be?

  79. “So the government is dissolved except for the army, and the many many federal police required to throw the poor in prison, and of course the many prisons housing those too poor to pay the prison/police/army bills.”

    About 80% of the federal government should be disolved anyway – it’s in violation of the 10th Amendment.

    And of course we can use private bounty hunters to round up the deadbeats. And we will make them work in prison to earn their keep – on chain gangs.

  80. Someone help me out, I’m too new here – is Gilbert for real, or am I being trolled hard?

  81. Tony – why don’t you surf on over to The Tax Foundation (lauded by both Friedman and JFK for their work) and tell me I don’t have the evidence?

    Of course, this:

    You have a bunch of misleading cherry-picked stats that state that our corporate tax rate is among the highest in the world

    is just proof that you won’t accept any evidence outside of your chosen faith: that, despite how low the burden is, TEH EVIL CORPORASHUNS still, for some mystifying reason, go through hoops to have offshore incorporation sites.

    Your narrative is nonsense, Tony: either the tax burden is low and the Cayman Islands stuff is extraneous silliness on the part of money-driven businessmen, or the tax burden is high and the Cayman Islands thing is a natural outgrowth of that.

    You want it both ways it’s nonsense.

  82. TAO,
    According to this, we’ve got a lower tax burden than at least 16 of the 19 OECD countries. Our statutory rate is high, but no one pays the statutory rate because of the double bookkeeping done by corporations.

    Gilbert,
    Let’s say I own 1 acre of land and Uncle Pennybags owns 17 acres of land. Isn’t Uncle Pennybags getting 17 times as much protection from the military as I am? If we get invaded, I lose 1 acre and he loses 17. Shouldn’t Federal employees pay even more because their jobs are the first to go in case of regime change, while the ladies that run the laundromat will still be running a laundromat?

  83. “Just what do you think is the result of having a government run by corporate lobbyists for 8+ years”

    do you think corporate lobbyists just showed up 8 years ago? are corporate lobbyists all that different from lobbyists hired by other special interests? they’ve been around as long as congress has been doling out the dollars. and they aren’t going away any time soon.

    just today i saw an article on bloomberg talking about how vilsack is wanting to increase the amount of ethanol must be blended into gas to make up for missing ethanol demand. why would he do that? i’ve got three words: archer, daniels, midland (along with all the others who will benefit from higher ethanol demand).

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a6.jirVMCddk&refer=home

  84. to me, they’re indistinguishable

    Well that’s one thing you and Ralph Nader agree on.

    I’m not saying Democrats are saintly, but they still resemble an actual political party capable of governing in the public interest, sometimes.

    The Republicans, meanwhile, have been entirely coopted by wealthy special interests who have succeeded in ramming anti-constitutional and regressive policies in the service of short-term profits. There is simply no Democratic equivalent of the K Street Project.

    It is fallacious to equate them in terms of corruption, just as it is fallacious to think that gridlock is good for the country. They will never “play nice” as long as one party has been taken over by a radical fringe that has never been capable of compromise.

  85. Let’s say I own 1 acre of land and Uncle Pennybags owns 17 acres of land. Isn’t Uncle Pennybags getting 17 times as much protection from the military as I am? If we get invaded, I lose 1 acre and he loses 17. Shouldn’t Federal employees pay even more because their jobs are the first to go in case of regime change, while the ladies that run the laundromat will still be running a laundromat?

    So you believe those who benefit more from society and government protection should themselves pay more to the government in exchange? Welcome to the socialist ulta-marxist Democrat Party. Here is your toaster.

  86. either the tax burden is low and the Cayman Islands stuff is extraneous silliness on the part of money-driven businessmen, or the tax burden is high and the Cayman Islands thing is a natural outgrowth of that.

    This doesn’t follow at all. Corporations are in the business of generating profit. They will (and should) do everything they can to maximize profit. They’re not going to stay away from the Caymans out of the goodness of their hearts because taxes are lowered to some arbitrary rate. They’re going to do whatever they’re legally allowed to do. The problem is that the government, run by radical right-wing plutocrats for so long, mistakingly felt that doing whatever corporations wanted was good for everyone else.

  87. Sure, eliminate the corporate tax AS WELL AS corporate personhood!

    Make shareholders legally accountable for corporate misdeeds. As of now, the corporation is in place to buffer the owners liability.

    But, as long as the “corporate shield” of person hood is in place a person should pay individual taxes.

  88. Shorter Tony: Corporations are greedy.

    Thanks, dude. All I needed to know.

    I mean, what is your suggestion? Mandate that no corporations that operate in the United States ever ever ever be incorporated elsewhere?

    Your “point” is getting dumber by the minute. If the tax burden were any where approaching rational, corporations would gladly not go through the costly process of trying to incorporate somewhere else and do business in the United States. Do you think that incorporating in the Cayman Islands, with all the requisite advice from attorneys and moving operations, is cheap?

  89. Someone help me out, I’m too new here – is Gilbert for real, or am I being trolled hard?

    Hard to tell around here, huh?

  90. “It is fallacious to equate them in terms of corruption, just as it is fallacious to think that gridlock is good for the country. They will never “play nice” as long as one party has been taken over by a radical fringe that has never been capable of compromise.”

    everybody thinks their team is better and more righteous, though, don’t they? if they didn’t, they’d switch teams. you don’t seem to be different. that’s cool with me.

    gridlock is good if it means neither side is able to ram through its special-interest influenced agenda. unfortunately, the gop discovered the power of earmarks, which will make it easier to buy off dissenting votes. i’ll be very surprised if the dems don’t carry on the tradition.

    and, if you ask me, they played nice quite well in the 90’s. clinton and the gop-controlled congress got some good stuff through. it wasn’t all perfect, but it was ok. they passed nafta, lowered cap gains taxes, passed welfare reform, among some other things that slip my mind right now.

  91. Shorter Tony: Corporations are greedy.

    Thanks, dude. All I needed to know.

    They are greedy. And they should be. That’s their job. I’m just arguing that it’s NOT the government’s job to enable that greed at the expense of everyone else.

  92. Our statutory rate is high, but no one pays the statutory rate because of the double bookkeeping done by corporations.

    No one? Do you think that corporations go into business, that is, initially incorporate, under the notion that they won’t pay the full 35%?

    Decisions are made at the margin, and the marginal tax rate discourages growth. And lest we forget that said high rate encourages waste in the form of hiring tax lawyers and accountants in an effort to reduce your burden. So, Mo, somebody, some corporation somewhere is paying that rate. And if nobody is, then cut the rate to the amount that everyone is paying and cut out the extra-expensive labor involved to do “creative accounting”.

  93. I’m just arguing that it’s NOT the government’s job to enable that greed at the expense of everyone else.

    Can you please point to me how that is happening? How is the government enabling greed?…and how is that enabling costing anyone else anything?

    Your cartoony robber-baron notions of corporations is showing.

  94. “Gilbert,
    Let’s say I own 1 acre of land and Uncle Pennybags owns 17 acres of land. Isn’t Uncle Pennybags getting 17 times as much protection from the military as I am? If we get invaded, I lose 1 acre and he loses 17. ”

    Military protection isn’t analgous to homeowners insurance.

    It costs a fixed amount to protect the physical borders of the nation regardless of the ownership composition of the protected territory. The military didn’t do anything “special” for the guy who was able to acquire 17 acres to enable that acquisition than it did for the guy who only managed to get one acre. It was due to other factors such the 17 acre guy being smarter, more industrious, disciplined or maybe just plain lucky and winning the lottery. Doesn’t matter – it wasn’t the military protection.

    The Nascar Sprint cup champion doesn’t have to pay any higher entrance fees to race on a racetrack than does the guy who routinely finishes last. It was his own driving ability that caused him to win – not something special the racetrack did for him.

  95. Yes, and it is awesome policy to tax people for managing to acquire 17 acres…how dare he be successful? Pay up, Uncle Pennybags, you bourgeois pig.

  96. Your cartoony robber-baron notions of corporations is showing.

    I am not blaming corporations for anything. It’s their job to maximize profit. Helping corporations maximize profits is not, however, the government’s job.

    What’s cartoony is you equating a progressive tax system–one of the oldest, most conservative notions in democracy–with midcentury communism.

  97. they passed nafta, lowered cap gains taxes, passed welfare reform, among some other things that slip my mind right now.

    In other words they did the bidding of corporate America. Wonderful!

    It’s kind of a pedantic subject, but an important one in my opinion. Poxing both houses ignores the different realities of the parties’ recent history. I’m not saying Democrats are all good, or even that they’re at all palatable for libertarian-minded people. I’m saying nobody should ever vote for any Republican.

  98. Tony, you like to selectively engage, and it’s getting old. Here are the questions you have studiously ignored so far:

    How is the government enabling greed?…and how is that enabling costing anyone else anything?

    Do you think that incorporating in the Cayman Islands, with all the requisite advice from attorneys and moving operations, is cheap?

    Oh, and you have yet to prove anything close to “lowest corporation tax burden in the world” as you asserted upthread.

    Better get to googling.

    What’s cartoony is you equating a progressive tax system–one of the oldest, most conservative notions in democracy–with midcentury communism.

    Whatever my opinions of progressive taxation, I am mocking the notion that the wealthy somehow benefit more from national defense because they have more to lose. That isn’t the point of national defense; it’s a public good that everyone benefits from equally because of the fixed borders of a nation.

  99. They are greedy. And they should be. That’s their job. I’m just arguing that it’s NOT the government’s job to enable that greed at the expense of everyone else.

    I see you agree that a limited government is best.

  100. I’m just fed up. I actually used to think there were intelligent libertarians. I consider myself a libertarian in some ways. But after spending time here it’s clear that you’re just a bunch of weed smoking Jesus hating Republicans, a rare breed indeed.

    Buh-bye then.

  101. “In other words they did the bidding of corporate America. Wonderful!”

    the democratic president can be a shill for big business as well? so what’s the difference? do you expect obama to be all that different from clinton? if so, why? based on what he said when he ran for office?

    just because a politician chooses a different special interest to appease than business doesn’t make him (or her) any better, unless, of course, you’re a part of that special interest group. if you own a lot of capital, you benefit from lower taxes on capital. if you run a labor union, you benefit from bigger union rolls. if you’re a farmer or a homeowner, you benefit from subsidies. politicians get elected by choosing a collection of special interests, promising that group of special interests some goodies, and then trying to get as many of those special interests out on election day.

  102. How is the government enabling greed?…and

    Read up on the K Street Project. There’s always been a too-close relationship between corporate America and the government, but in recent decades it’s become an absolute orgy of political donations in exchange for policy. It was deliberately set up by interests that have grown sophisticated in manipulating a 230-year-old government, not to mention a politically active but undereducated theocratic/nationalist demographic.

    how is that enabling costing anyone else anything?

    Hmm, how are such things as decimating welfare and attempting to decimate social security costing anyone anything? What about not spending money on infrastructure and instead spending it on tax cuts for the wealthy. Let me think for a sec…

    Do you think that incorporating in the Cayman Islands, with all the requisite advice from attorneys and moving operations, is cheap?

    No, I don’t. But that is so not relevant unless your point is that we should lower tax rates to the extent that corporations will not have an incentive to relocate headquarters to places with zero taxes. Meaning our rates would have to impose a burden that is just under the burden of hiring lawyers and setting up shop in the Caymans. I’m sure you’re aware that I think that’s a silly idea, since I think we should tax corporations more than we do.

    I am mocking the notion that the wealthy somehow benefit more from national defense because they have more to lose.

    If all stuff is theoretically equally protected, and you have more stuff that needs protecting, do you not benefit more from the protection?

    If national defense is a justifiable expense for the common good, why isn’t, say, healthcare?

  103. the democratic president can be a shill for big business as well? so what’s the difference? do you expect obama to be all that different from clinton? if so, why? based on what he said when he ran for office?

    Yes, Democrats can be and are shills for special interests too. That doesn’t mean they’re nearly as corrupt as Republicans about it. Plus, I believe in freedom of speech and thus the right to lobby. My problem is the influence of money, and the activity that at one time was called the crime of bribery.

  104. “I’m saying nobody should ever vote for any Republican.”

    nothing like some good, old-fashioned partisanship. dismissing millions of people who consider themselves republicans and support their various causes (remember, we had in the neighborhood of 60M people vote for mccain in november) doesn’t look too balanced.

    but i guess you’ve gotta cheer for the team! yeeaaa!!

  105. I believe in freedom of speech and thus the right to lobby. My problem is the influence of money, and the activity that at one time was called the crime of bribery.

    Tell me, Tony, what was formerly bribery and what is no longer bribery?

    I sense you have no idea what you’re talking about.

  106. If national defense is a justifiable expense for the common good, why isn’t, say, healthcare?

    Healthcare isn’t a public good and can be provided neither efficiently nor fairly by the government.

    If all stuff is theoretically equally protected, and you have more stuff that needs protecting, do you not benefit more from the protection?

    OK, Tony, so, who should pay more in taxes…the lady with 14 kids or Bill Gates? How valuable are children? 😀

  107. “Yes, Democrats can be and are shills for special interests too.”

    so what’s the difference?

    “That doesn’t mean they’re nearly as corrupt as Republicans about it.”

    based on what? you’ve mentioned the k-street project. that wasn’t pretty, but it didn’t force anyone to vote for anything. what else do you have? and how would you go about quantifying anything to the point where you can say not “nearly as corrupt”. again, i think they’re both bad. i just think you’re looking at your own party through rose-colored glasses.

    “Plus, I believe in freedom of speech and thus the right to lobby. My problem is the influence of money, and the activity that at one time was called the crime of bribery.”

    money will be a problem in politics as long as there is something to buy. members of congress pimp themselves out to the highest bidder on a regular basis. the only way to stop it is to either 1) amend the constitution so we can’t redress grievances, 2) violate the constitution (see mccain-feingold, though the SCOTUS disagrees) by passing a law saying we can’t redress grievances, or 3) give less to congress that can be bought with votes.

  108. violate the constitution (see mccain-feingold, though the SCOTUS disagrees)

    To be fair, Wisconsin v. Right to Life may have* essentially gutted some of the more egregious portions of BCRA.

  109. “To be fair, Wisconsin v. Right to Life may have* essentially gutted some of the more egregious portions of BCRA.”

    conceded. i was just making the point that it wouldn’t be the first time certain rights to speech were legislated away.

  110. dismissing millions of people who consider themselves republicans… doesn’t look too balanced.

    Who cares about balance? I’m not a debate moderator. I don’t like that millions of people have been duped into voting against their own interests by the most corrupt party in the western world. I sincerely wish people wouldn’t enable regressive economic policies by falling for Republican distractions over religion and Orwellian talking points about “freedom.” Luckily I won’t have to worry about that for a long time because the Republican party has become a minority party for a generation, they just don’t know it yet.

  111. hutch,

    I disagree that money equals speech. I think that concept is one of the principle causes of the corruption I referred to.

    You can’t really quantify corruption, but it’s fallacious to default to a position that both parties are equally corrupt. This requires just as much evidence as any other measure does.

    I am perfectly skeptical of Democrats. (You’re allowed to be when you’re a Democrat.) But given that we have two real choices, and given that Republicans have been completely taken over by movement conservatives, almost all of whose ideas I find anti-American and abhorrent, I’ll take what I can get.

  112. RAH RAH SIS BOOM BAH! GO TEAM BLUE!

    We get it, Tony.

  113. I rather get rid of the payroll tax.

  114. No one? Do you think that corporations go into business, that is, initially incorporate, under the notion that they won’t pay the full 35%?

    Decisions are made at the margin, and the marginal tax rate discourages growth. And lest we forget that said high rate encourages waste in the form of hiring tax lawyers and accountants in an effort to reduce your burden. So, Mo, somebody, some corporation somewhere is paying that rate. And if nobody is, then cut the rate to the amount that everyone is paying and cut out the extra-expensive labor involved to do “creative accounting”.

    Ok, probably not “nobody”, but any corporation with a half decent accountant doesn’t pay the 35%. It’s a bunch of bull, but that’s the way it is.

    Dude, I would totally be on board for getting rid of all of the loopholes and b.s. that makes the statutory rate not be the effective rate. However, it’s simplistic to claim that our tax rate is too high, when the average tax burden (which is when tax rate hits reality) is far lower than the vast majority of our peers.

    I advocated above getting rid of all deductions and loopholes and go to a flat tax. Ir would be far lower than the 35% and closer to the actual tax burden (though possibly higher due to bringing income/payroll taxes down and staying revenue neutral). But lowering the tax rate alone isn’t going to get rid of the loopholes, instead we’ll still have the tax lawyers and accountants.

  115. Economy Rescued!

    God Bless courageous Republicans Arlen Spector, Olympia Snowe, and Susan Collins!

  116. i didn’t say anything about moderating debates. the good thing to do is engage in debates, which is what we’re all doing here. i like it. i think it’s fun, and i assume you do as well. but if the point is to get to a good answer, taking 60M people as a group and pushing them to the side because you think they were duped simply because they voted differently than you did, isn’t a good way to do it. i think it’s safe to say you are not the intellectual loadstar we should all look to for wisdom in voting (neither am i, by the way).

    and as soon as any party thinks it will be the majority into the foreseeable future, they won’t.

    trying to redefine the meaning of freedom of speech to include certain things and not include others is a dangerous road to go down. saying someone doesn’t have the right to spend their own money however they want to voice their opinions is beyond comprehension to me. we need transparency, not restrictions. i’m not saying i know the right degree of transparency, though.

    it’s easy to default to a position of “equally corrupt” when you understand how the political system works. politicians have just as much self-interest/greed, fallability, blindspots, biases, as anyone else. to think of politicians from party A as being fundamentally different from politicians from party B is to misunderstand the political animal. they all want to get elected (and re-elected) so they do what they need to do to get there. if they can find a majority of people to elect them based on a set of promises and then impose the cost of those promises on the minority, they will. both parties do that.

    what are the anti-american ideas you find so abhorrent? and how do you exactly define “american” in that context? has the meaning of that term changed over time in your opinion?

  117. Healthcare isn’t a public good and can be provided neither efficiently nor fairly by the government.

    Evidence suggests that governments can provide it efficiently and fairly. There’s no evidence that our current system is either.

    Why can government provide efficient national defense, but not health care? Why shouldn’t we privatize defense?

    I don’t see why police and fire protection are considered public goods to be paid for collectively but not health care. But this is a different debate.

  118. by the way, mo, i agree with you wholeheartedly on the flat tax issue with all loopholes, for corps and individuals, eliminated. imagine how much we’d save a year on tax lawyers and accountants. 1) i don’t see the need to tax profits twice (once when they’re earned and again when they’re distributed) and 2) i don’t see the need to tax profits differently depending on how the business is set up with c corps paying twice and llc’s, llp’s, and s corp’s paying once.

  119. hutch,

    Thank you for appreciating the value of debate. Often I’m told simply to go away. Because this place values “free minds.” Ha.

    Anyway, to a certain extent, yes, both parties are corrupt and too influenced by money. Bribery is defined as an impeachable offense by name in the constitution. I don’t see how you can define exchanging political contributions for policy as anything but bribery. Money cannot equal speech because a wealthy person shouldn’t be afforded more “speech” than a poor person. There is no moral justification for this that I can figure.

    The Republican party is more corrupt because of specific historical events. Anti-tax rich people and religious ultraconservatives were once considered very fringe. But they managed to amass enough wealth to take over a political party. These movement conservatives now decide who to run in elections, and the only Republicans in Congress who aren’t fringe movement conservatives are people who were elected before 1994. Because movement conservatism has taken over the RNC, nobody else gets a chance to run for office in that party. Unfortunately for them, this means they have now inevitably become a minority party.

    The Gingrich alliance between corporate America and the Republican party has resulted in the dominance of what were once considered extremist ideas. 9/11 afforded the Bush administration, the culmination of movement conservatism’s power-grab, untold amounts of power. It is my hope that this revolution is now over.

  120. Tony
    If you don’t start agreeing with TAO soon he’s going to accuse you of being a troll. Because no honest liberal could withstand his awesome skillz and not be converted! I mean, that guy has taken the time to read Maurren Dowd for pete’s sake, he knows our playbook in and out!

  121. Episiarch | February 6, 2009, 3:36pm | #
    Won’t someone think of the accountants?!?

    I’m thinking they’re almost as bad as the lawyers?

    Hate the game, not da playa, man

  122. “Healthcare isn’t a public good and can be provided neither efficiently nor fairly by the government.”

    This was in response to Tony’s question as to why health care isn’t a justifiable expense for the common good, and TAO replies basically with “because it’s not a justifiable expense for the common good.”

    And since Tony already spanked the lame quasi-empirical claim tacked on at the end there’s no need to comment there.

    TAO, are you reading that list of prominent liberal thinkers I gave you? Seriously dude, it’ll help.

  123. i agree things get grey (or is it gray? i never can remember how to spell that word). but trying to parse out what is allowable speech and what isn’t is a slippery slope i don’t want to give a politician the right to decide upon. and money is far from the only source of advantage (it’s even debatable to what degree money is even an advantage). having a recognizable name is an advantage (kennedy, rockefeller, ford, etc). do they deserve more free speech than someone who doesn’t command an audience as easily? i’d bet the governator wouldn’t have been elected if he hadn’t been in a movie or two beforehand. do we try to make everyone play on an equal playing field? how do we do that? and for what its worth, “the poor” have many voices and people who vote in what is believed to be in their best interest. you, and others, who rally against “the rich” are such people.

    it’s hard to call a movement that got 60M presidential votes fringe. and to say mccain represents the republican party of the last 25 years is mistaken. and to say they all (both those who ran for the pres bid and lost as well as those who currently sit on capitol hill) fit that is wrong. the gop is a hodgepodge of social big gment type, fiscal small gment types, and defense…who knows what types. the dems are practically the opposite in every way. and there is a lot of infighting within both parties. very few people in their heart of hearts, in my opinion, toe the party line across the board. those who do, are just team players. most people vote on no more than a few issues (abortion, gay rights, the environment, taxes, trade, foreign policy, etc) and hold their nose at the rest.

  124. “and hold their nose at the rest.”

    i should add…if they even have an opinion.

  125. There is no public interests, only many, many private ones.

    A person who makes a lot of money is entitled to the money they made, end point. The government has no entitlement to it. If a company is owned by many people, they all deserve the money they made.

    If big “evil” corporations are making money by fraud and/or force, then why argue for taxing away their profits? Shouldn’t you really be arguing for a better system for restitution for those who were defrauded? Or perhaps some actual, good regulation designed to prevent and eliminate fraud? You know, the actual, legitimate purpose and design of government?

    Just taxing “the rich” because some companies gained wealth through deception is claiming guilt by association.

    Eliminate the corporate income tax. Eliminate the income tax. Eliminate the payroll tax. Perhaps then we’ll see a real economic stimulus.

  126. How bout we get rid of the personal income tax and corporations.

  127. If you eliminate dividend and corporate taxes, tax evasion becomes embarrassingly easy for anyone with a few hundred bucks that creates a shell corporation.

    How about keeping a tax on dividends? When your capital gains are finally realized, either by selling your shares or taking a dividend, then the gov’t gets a cut. But a corporate tax seems inefficient and unnecessary. Corporate profits are always at a level in line with the competition they are facing. No corporate tax means lower price, higher wages, the same government revenue because the profits are eventually taxed one way or another. And it also means no more loopholes, lobbying for loopholes, and thus a more responsive government. So what’s the problem with abolishing corporate taxes?

  128. Have her shoot PETA members and then grind their bodies up for hog feed.

    I like it. Let’s also figure out a greenpeace angle.

    -jcr

  129. Yes, we should get rid of the corporate tax, and then treat capital gains and dividends like any other income. This more or less will result in similar overall levels of taxation as to what we have now, with fewer oddball distortions and fewer claims by left-leaning billionaires (ahem…Buffet…) who claim they pay “lower tax rates than their secretary” while ignoring the hundreds of millions that the fractional corporations that they own pay on their behalf.

    One nice advantage of dropping the corporate tax and treating capital gains and dividends as regular income is that this will cause the latter forms of income to be treated progressively, which is one current flaw of the tax system.

    Honestly, we could tax the mega-rich like Buffet 75% capital gains tax, and he would keep right on investing. What else is he going to do? Spend it on a fairy-tale castle?

  130. Tony,
    “I’m just fed up.”
    Then fuck off. All you ever do is come here and regurgitate the same talking points repeatedly. You will not be greatly missed, I assure you.

  131. “This was in response to Tony’s question as to why health care isn’t a justifiable expense for the common good, and TAO replies basically with ‘because it’s not a justifiable expense for the common good.'”

    No, it’s because most healthcare spending, unlike defense, policing, and infrastructure (to a certain extent) does not create spillover benefits/positive externalities.

  132. Not sure about the capital gains tax either. Can’t the government get by on taxes from interest, dividends, and tariffs, and perhaps a sales tax or VAT? Income tax is intrusive and inefficient (although FICA makes sense as a social insurance scheme if it is strictly limited to that). The treasury should be able to derive all the revenue it needs from as few sources as possible.

  133. Tony,
    “Thank you for appreciating the value of debate. Often I’m told simply to go away. Because this place values ‘free minds.’ Ha.”

    You don’t debate. You just repeat “Teh Corporashunz are evil!” and “Libertarians are stoopid!” Come up with some actual evidence and a compelling argument and maybe people will stop telling you to bugger off. It’s not like you see too many instances of joe, MNG, or Neu getting told to just go away (except for that one time when joe just wanted to be a dick).

  134. On the subject of taxes, I highly suggest reading President Jefferson’s second inaugural address, it will be worth your time.

  135. Ehh.

    A corporation must still be a big mystery to some. The word “corporation” seems to conjure up visions of well dressed people gathered around a long, wooden, polished table in an office overlooking a big city skyline, making big decisions.

    Actually, forming a corporation involves filling out a few forms on LegalZoom. I think all states have some filing fee, some states have an annual fee for maintaining a corporation, others do not. Some states require a physical presence of some sort, like renting a private mailbox in Winnamucca, NV.

    Singling out corporations for tax relief based on their supposed industriousness is just kicking the can down the street.

  136. I’m not saying Democrats are saintly, but they still resemble an actual political party capable of governing in the public interest, sometimes.

    Can you give an example of them doing so after the Jefferson administration?

    -jcr

  137. . Can’t the government get by on taxes from interest, dividends, and tariffs, and perhaps a sales tax or VAT?

    If we were to return to constitutional government, it could be funded indefinitely by selling off the property that shouldn’t be in federal hands in the first place, and investing the proceeds in interest-bearing accounts.

    -jcr

  138. I good with dropping corporate taxes, provided we first drop all corporate welfare. Otherwise, no dice.

  139. “Tbone | February 7, 2009, 10:24am | #

    I good with dropping corporate taxes, provided we first drop all corporate welfare. Otherwise, no dice.”

    Usually, when people talk about “corporate welfare”, they are talking about tax breaks. So you are saying you are for tax cuts if we drop tax cuts?

  140. If we were to return to constitutional government, it could be funded indefinitely by selling off the property that shouldn’t be in federal hands in the first place, and investing the proceeds in interest-bearing accounts.

    You must not be talking about the US Constitution. While it was somewhat controversial at the time, the Louisiana Purchase was approved of by members of the founding generation and set the precedence of the federal government purchasing land. So you’re describing a situation that was only in existence for barely over a decade of our county’s existence as a constitutional republic.

  141. You don’t debate. You just repeat “Teh Corporashunz are evil!” and “Libertarians are stoopid!” Come up with some actual evidence and a compelling argument and maybe people will stop telling you to bugger off. It’s not like you see too many instances of joe, MNG, or Neu getting told to just go away (except for that one time when joe just wanted to be a dick).

    I never said corporations are evil. I have said repeatedly that it’s their right and their duty to maximize profits. My beef is with a government that does the bidding of campaign contributing corporate interests to the exclusion of the interests of everyone else, and then sell these policies by wrapping them in the flag and Jesus and what not. I’m angry at the government, just like you people. The difference is I believe the government, contrary to Reagan’s plutocratic propaganda, can be a force for public good, and indeed may be the only entity powerful enough to counter corporate interests when they are acting against the public good.

  142. Tony,

    The best, most appropriate, most powerful organizations to fight again private power are other private entities. That’s basically the underlying concept of the free market, is that if some company is doing something that isn’t maximizing it’s profits, another company will fill that gap, and the previous company will either have to change or die.

    We must now consider two things: what could a company be doing that was bad, but had no impact on their profits, and the second, what does a company need to do to make more profit?

    The second one is easy, it’s providing goods and services people want at a price they are willing to pay for. That’s it. Under an ideal free market system, that’s the ONLY way to acquire vast sums of wealth. Under our current system of a strong government with strong regulations, a company can essentially pay to get laws passed that either favor them, or hurt their competition. Power corrupts, and no matter what you think the government is capable of (good, bad, ugly), no matter what kind of angels you think we can get into power (Herr Obama), the system will always benefits those who already have power, and prevent those who don’t from acquiring it.

    The government is almost never a force for good, it’s usually only a force for my good at the expense of you, or vice versa.

  143. Wow, 142 comments, I am like 15 comments in, and already astounded by the amount of communists that come to this site.

    No corporate tax, no income tax. They are both stupid and wrong.

    Taxes should be as close to user fees as it can be.

    That is fair, trying to tax someone because they make too much money is not only not fair, it is folly. It doesn’t work, it only punishes those who haven’t made it and want to, and it punished establishes people in classes based on their political connections.

  144. if some company is doing something that isn’t maximizing it’s profits, another company will fill that gap, and the previous company will either have to change or die.

    What does a company maximizing its profits have to do with the public good? How will the market provide protection from a factory polluting a common water supply?

    Power corrupts…
    The government is almost never a force for good, it’s usually only a force for my good at the expense of you, or vice versa.

    That’s a remarkably cynical view. If the government WE elect to serve OUR interests with OUR money can never be a force for those interests, then something is seriously wrong with the government. Perhaps that is the case. Perhaps corporations are simply too powerful, and they will take over the Democratic party just as they have the Republicans. That, to me, is not a reason to diminish further the power of the government, which, unlike corporations, is supposed to be accountable to everyone.

    If power corrupts, why do you just worry about the power of an ostensibly democratic government, but give single-minded profit-driven mini-dictatorships known as corporations a pass on everything?

  145. “Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers. ” You got that right, factories in China and Asia. Corporations have no national boundaries, or national concerns about the well being of citizens. They have only one concern, and that is making a profit that will please the shareholders and bring a bonus to the corporate officers. Ultimately Corporations do not pay taxes, they pass on their tax burden to the people who buy their services or products. Since Corporations have the money to hire tax specialists and form industry lobbing groups that common citizens, with far less discretionary income, have few comparable organizations then in fact the reverse is true. Let the Corporations who have the lobbyists and the resources battle each other about the national tax burden in Congress. The citizens would pay no direct tax, no capitol gains tax, no income tax, they would only pay the tax passed on to them when they buy a product or service.

  146. What does a company maximizing its profits have to do with the public good?

    Because the only thing a company can do to make money is provide things that people want. That is the force of public good, as much as there could possible be a “public good”. There are no “public good”s, only many, many private goods, and each person (or company) will act to maximize and protect what is good for them.

    How will the market provide protection from a factory polluting a common water supply?

    Pollution, in the vast majority of cases, is one person violating another person’s rights, and protecting rights is definitely the legitimate role of the government.

    Why … give single-minded profit-driven mini-dictatorships known as corporations a pass on everything

    I don’t give them a pass, ever. If they violated someones rights, the government should exert it’s power to provide restitution. The problem is defining what acts are violating people’s rights. In most cases (if not all), the government should only be protecting negative rights, not positive rights. If you are a woman, or a minority, and a private company decides to not hire you on that basis, have your rights been trampled on? Not really, as you had no “right” to work for that company. It’s also a bad decision by the company to hire and fire for any reason other than business related interests, such as capability and productivity.

    I just really believe that when the government tries to help people, it’s at the expense of others, simply due to the coercive nature of government. When private interests try to help, they usually end up helping both parties involved, since it’s almost always a voluntary exchange.

  147. This type of article is exactly why the left accuses cosmotarians of being shills for the elite. Any economic argument for eliminating the corporate income tax also applies (if not more so) to the personal income tax. The personal income tax is more economically harmful and less morally justifiable, so if we have to keep one, it should be the corporate tax.
    Obviously we should get rid of both, but you goddamn fucking cosmotards will NOT gain any political traction by preferring the personal income tax to the corporate income tax or the inheritance (death) tax. It just reinforces the perception that you care more about the rich and the powerful than the poor.

  148. Supposing for a second that these arguments are justified, it’s still a pointless proposal since social democrats would never stand for it. I know Reason often serves as little more than a pulpit for ideas that will never see the light of day in our political climate, but perhaps a more moderate proposal would actually gain some momentum.

    For instance, rather than repealing the corporate tax, how about proposing a flat, very low base corporate tax of around 5%, devoid of carrot & stick measures that overcomplicate the tax code and unfairly penalize small businesses who can’t afford top-notch accounting. This would not decrease the effective tax rate on many major corporations, but it would cut small business a major break – especially corporations with one or a handful of employees who are basically just seeing their personal income directly taxed twice – once on the corporate side, once on the personal side, for a huge net loss of income. The price of shielding one’s personal assets from one’s business ventures should not be close to 50% of one’s income.

    Some taxes designed to recover public costs of corporate activity could remain – for instance the proposed carbon tax. Incentive tax breaks which in practical application only serve to skew the market greatly in favor of large businesses should however be eliminated.

  149. If we were to return to constitutional government, it could be funded indefinitely by selling off the property that shouldn’t be in federal hands in the first place, and investing the proceeds in interest-bearing accounts.

    What’s the value of government-owned land? I actually have no problem with things like National Parks so if that’s the majority of government property you can count me out.

    It just reinforces the perception that you care more about the rich and the powerful than the poor.

    We’re just discussing the idea. I’m sure after looking at the issue long enough I will conclude that eliminating the corporate income tax is a lower priority than other economic and tax issues, but on the other hand, can you see the value in letting corporations reinvest their profits rather than taxing the value of their profits from Jan. 1 through Dec. 31? In some cases that could kill a business.

    I suppose it makes no sense to talk about eliminating corporate income taxes unless you either 1) eliminate personal imcome tax or 2) pierce the corporate veil as has been mentioned above.

    Justen,
    “S Corporations” eliminate double taxation for small business of fewer than 25 employees I believe. Not sure how this works but it’s useful for some people. Otherwise you could just pay yourself 100% of corporate profits, pay the personal income tax, and pay no corporate tax because it didn’t turn a profit. Nonetheless, in the case of large corporations competing in the marketplace, double taxation is an economic drag that should be replaced by other taxes.

  150. The two primary legal consequences of incorporation are: (1) limiting the shareholder’s liability for the consequences of their actions to the corporation’s assets, and (2) differing tax treatment, which may be more or less favorable than personal income taxation depending on the circumstances. The rationale for limiting liability is that the corporation is a legal fiction, in law a legal “person” with distinct rights.

    Now if a person is able to get the legal benefit of limited liability by having a corporation, shouldn’t this “new person” have to pay his share of taxes too?

  151. A corporation is a bunch of paper. It is a legal entity but it is non-sentient as paper tends to be. By itself a corporation is not evil or greedy.

    Corporations have progressive tax structures just like individuals. If you are in the highest individual tax bracket one can save taxes by reducing you corporate income to a lower amount by running personal expenses through the corporation. However this is illegal and there is a regulatory body designed to catch and punish you, it’s called the IRS. Eliminating the corporate tax rate neither invents nor abolishes this practice.

    IMO, the corporate tax rate should be eliminated and capital gain rates should be set equal to personal income tax. This would have the benefit of sticking it to trust fund kids and the Kennedys, two groups who tend to think money grows on trees. Labor is not less important to the economy than capital.

  152. Big Green Monkey,

    Well spoken sir, I copied and pasted your first post onto my facebook, for its truth. I hope you are ok with that.

  153. BTW,

    All you all arguing against ending corporate income taxes because you don’t see how shit will get paid for, is like arguing against ending slavery because you don’t know how shit will get built without it.

    Firstly income tax (and corporate tax) is immoral. And should end for that reason along.

    If you don’t know what should replace it. Too bad.

  154. “That, to me, is not a reason to diminish further the power of the government, which, unlike corporations, is supposed to be accountable to everyone.”

    No, it’s accountable to the majority of voters. Sometimes. When a lot of them are watching closely.

    That definitely doesn’t count as “everyone”.

  155. I haven’t read anything here, but seriously fuck you Reason Mag for hiring dickheads that supported this piece of shit.

  156. PS. I used to read Reason Magazine

  157. One point I have noticed in some of these posts that is completely antithetical to liberatarianism has been support for progressive taxation. If I dig ditches or come up with the cure for cancer I should pay the same flat tax rate. There should be no deductions or accounting schemes, just a tax form the size and complexity of a post card.

  158. The corporate tax system has become corrupt. I don’t think the way to fix it is to eliminate it. However, that could put a more than a few corporate lobbyists out of work. Corporate taxes should be used as incentive/disincentives. It could be a good way to steer business, rather than overcontrolling it, or allowing it to run completely free.

  159. Corporate taxes should be used as incentive/disincentives.

    wrong

    If you cannot escape your nannytarian urge to control the impure urges of the vast smelly masses, at least advocate consumption taxes, which make the intent and effect of your social engineering plainly obvious.

  160. What would I call eliminating the corporate income tax? A good start.

    Let’s repeal the individual income tax as well. It would cost no more in “lost revenue” than the various “stimulus” plans are costing anyway, in money the government has to borrow/print.

    Imagine the boost the economy would get!

  161. One point I have noticed in some of these posts that is completely antithetical to liberatarianism has been support for progressive taxation. If I dig ditches or come up with the cure for cancer I should pay the same flat tax rate.

    Why should someone who earns more have to pay more in taxes? Even with a flat rate, the more productive members of society are penalized more, for the same level of government “service”.

    If governments exist at all, the fee should be the same for everyone, like a club.

  162. All you all arguing against ending corporate income taxes because you don’t see how shit will get paid for, is like arguing against ending slavery because you don’t know how shit will get built without it.

    Sorry I just had to quote this because it deserves to be repeated. Such a statement is truly, uh, something to behold.

    No discussion of appropriate tax rates is complete without paying attention to what government programs are to be cut.

    Most people here are arguing for more regressive taxation, all spending being equal. You want to punish the non-wealthy more and you have the gall to talk about morality. We’ve had a system of effective socialism for the rich in this country yet all anyone here has time to do is heap scorn and wish punishment on the poor and middle class for their crime of being actual capitalists, not that they had a choice in the matter.

    So why can’t you just come out and say you want the non-wealthy to pay more than they can afford so that the rich can be even richer? Defend that, if you can get up off your knees to take a break from servicing the corporate socialists for a minute.

  163. TofuSushi:”It is not fair for corporations to not have to pay taxes but everybody else has to. It is unpatriotic”

    Not sure what you’re getting at since businesses large and small don’t pay taxes PEOPLE DO.

    If a business “pays” a tax the people pay for in
    Higher prices for goods
    Lower quality of goods
    Lower wages
    Lower safety measures
    Or Loss of job.
    There is no way around this reality. Tax a business we then shoot ourselves in the foot.
    That’s what this article is trying to get across.

  164. Tony, you’ve been bordering on troll this whole thread. People here are trying to discuss the merits of various taxes, their economic and social impacts, and generally we are talking about the best way for a central government to derive revenue from the people with the least intrusion into our lives. Opposition to income taxes, both personal and corporate, flat and progressive, is usually based on considerations of liberty–nobody wants to be forced to expose their personal affairs to the government if they don’t absolutely have to. But you want to accuse people of being sycophants because you can’t debate the subject in these terms. You’re too fixated on “rich vs. poor” to even consider liberty an important factor in politics.

    But let me try to speak directly to your point anyway:
    Most people here are arguing for more regressive taxation, all spending being equal. You want to punish the non-wealthy more and you have the gall to talk about morality.

    I don’t see how eliminating corporate taxes makes the rich richer. The shareholders would still be forced to pay taxes on their dividends and capital gains. Any benefits received by rich people would still be counted as income and taxed. And as mentioned before, prices would go down and wages would go up. So how is this bad for poor people and good for rich people?

  165. This guy lectures at Harvard in economics? No wonder the country is in such bad shape, if this is what he is brainwashing his students with. I’m guessing he knows economic history and simple basic math. It is impossible to borrow your way out of debt. Doing away with the FEDERAL RESERVE and the IRS is the only way to fix this mess. Corporation pass on all their expenses to the consumer, should we allow the electrical, water, and phone services be provided free to corporations and and pass that cost on to all non-business consumers also. Corporations need customers to buy their products to tax the costumer into poverty will put all the money in to few hands and we’ll all go down. Reason TV has disappointed me by allowing shortsighted back word thinking as this to be presented as a good ideal.

  166. only if we eliminate corporations’ right of free speech/political contributions first. these rights rightly belong only to individuals. then i’ll consider eliminating their income tax.

  167. The corporate tax debate is a red herring. The cosmotards are arguing for tiny and marginal reforms to a thoroughly evil system. If only the slave masters would be just a little bit nicer to the slaves, productivity would go up! More cotton for everybody, including slaves!

    The real issue is whether or not the state has a legitimate claim on our wages. I would argue that it doesn’t, especially when compared to the income of corporations. Corporations are largely creations of the state, so if anything should be taxed, it should be corporations and not workers.

    Merely filing an income tax return is a violation of privacy as well as a possible violation of fifth amendment protection against self-incrimination.
    I know someone who grows medical marijuana in a state where that is legal. This person is required to violate federal law be either lying on his federal income tax or not filing one. He is not allowed to honestly file his tax returns without incriminating himself relative to federal anti-marijuana law.

  168. A question that never gets asked is why the gov’t needs to tax anything anyway when they have the printing presses. Inflation is a tax and a much less invasive one than income tax. If they just print all of the money they need to spend with the corresponding devaluation of our money, the same ends get accomplished more efficiently. I suspect that the answer has to do with the real goals of the tax being different than the stated goals of “fair” revenue collection.

  169. If you cut the corporate income tax, how to the politicians get their cut? How do they pay back their donors? There is no oppportunity for graft in your plan. A politican would have to be honest to be interested in this.

  170. Brucie:

    Would you advocate the same restrictions on labor unions, foundations, and special interests groups as you do for business?

    Crickets.

  171. Mark:

    You are so right. To read Tony’s observations one has to protect against this arroganceof ignorance. Someone made the observation that arguing against corporate taxation is like arguing against the abolition of slavery because how would things get built.

    The trolls aren’t concerned with evidence nor reason much less debate. They mouth slogans and hurl feeces.

  172. You mean ‘arguing against ending corporate taxation’ right?

    One of the commenters above tried to make a point in this argument by referencing slavery. His point was almost “Godwinned” from the beginning, but it was not lost on Tony: Changing one or another government policy always involves tradeoffs. Unfortunately, Tony took it as gospel that such tradeoffs would always be anti-poor and pro-rich.

  173. Mark and CG-

    You seem to be missing a salient point: Although the economic case for eliminating the corporate tax is strong, politically the way to go is to target the personal income tax, as it would reduce payroll costs to corporations at the same time it would be a much easier sell to the electorate.

  174. If all of you on this board loved your country as much as I do you would pray really hard to Obama to make taxes (or whatever) go away and for the rich to die and for all the land to be given to the poor — so they can farm.

    I pray to Obama. Prayer changes things.

    Bill Walsh

  175. It would be nice to have no income tax, and it seems unintuitive to say you simply can’t raise enough revenue from other sources. How about taxing only interest, dividends, and rent (and perhaps a flat import tariff)? All of our money flows though those mechanisms and would be mainly paid by the rich (of course the effects would be felt throughout the economy but Apr. 15th would be a distant memory to most people).

    But if you’re going to keep the income tax, I agree it should be able to fit on one side of a postcard. I believe Milton Friedman once argued for a flat as well as negative income tax. Here’s my modest proposal:
    Flat tax rate of 35%
    25k deduction per adult, 10k per child
    No other deductions

    So for instance if you make 25k, you take the 25k deduction and pay 0 tax. If you make 50k, you take the 25k deduction and pay 35% times 25k = $8750, for an effective tax rate of 17.5%. If you make a million you pay $341,250 or 34%. If you make 12,500 per year, you take the 25k deduction and your taxable income is negative 12.5k, so the government pays you a subsidy of $4,375, which goes on your paycheck, an extra $364 per month. If you don’t work you can’t get the subsidy. Every dollar earned up to 25k makes at least a dollar and every dollar thereafter makes 65 cents.

    I know the plan sounds socialist but at least it’s simple and fair, as compared to our current system.

  176. Why there, like that? Why not start at the bottom end of the tax rolls and flow the cuts up the chain? If tax cuts are good in the top end then they will work from the other end of the spectrum? In the absence of a single percentage across the board, which would be fairest and least prejudicial to the economy and tax victims(er payers). The problem with all these different rates and manipulation of tax code is the economy doesn’t stand a chance in the long run because we’ve already tilted the balance, no matter what our good intentions were for whatever group favored. The result is debatable but who’s to say that we don’t influence the economy with results we don’t anticipate or necessarily like.

  177. Mark:
    Interesting proposal but why not exempt the first 10,000 in dividend interest totally. This encourages saving and investment.

    A flat tax at a lower rate is better why 35% which is about the top rate now. Why not a flat 15% rate after the deductions you mentioned.

    But only if you have a constitutional amendment to this effect and a ban on federal user fees and nuissance taxes like the gasoline tax., etc. There should also be a limit on state income taxes and on property taxes (if allowed should be based on purchase price not a sliding scale which is a license to steal).

  178. Hang on. Would you rather be forced to give a detailed report of your income each year to the government, or pay a “nuisance” tax like gasoline? Frankly I would not mind a revenue-neutral solution where you trade a gas tax for some other more intrusive tax. If only the most popular NST scheme did not include pre-paid debit “welfare” cards I would support it. (Yes I understand the irony that I sort of advocated welfare in a previous post.)

  179. With today’s public perception of corporate honchos as a herd of swine, it’s probably not the best time to propose throwing more slop into the trough.

  180. I really hate the term redistribution of wealth!
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