We are once again hearing rumbles about the need to change the corporate tax. Both Democrat and Republican politicians seem to recognize the need to revise the the tax code for corporations.
The Democrats normally suggest eliminating the ‘loopholes’ for corporations, propose tighter regulations that would discourage moving off shore, or propose lowering the rate by some small amount.
The Republicans may agree with Democrats about eliminating ‘loopholes’, tend to want to lower the tax on off shore earnings, or propose lowering the corporate tax rate.
It is, perhaps, refreshing that both parties recognize ‘loopholes’ and the high corporate tax as a ‘problem’.
Unfortunately, neither party seems to recognize that there is really a simple solution to both loopholes and our punitively (relative) high corporate tax. This solution even promotes the return of the >$1 trillion off shore earnings to the U.S. where it just might be used to expand investment and jobs.
The simple solution? Simply eliminate the corporate tax!
No loopholes. A level playing field for upstarts to compete with the ‘establishment’. No penalty on off shore earnings coming back to the U.S.
I can hear the Democrats screaming now. It wouldn’t be ‘fair’ to allow the greedy and evil corporations to not pay their share of taxes.
This position completely ignores the simple fact that we consumers pay the corporate tax as the cost of that tax is included in the price of corporate goods.
Both parties fail to support the total elimination of the corporate tax. Why would this be when anyone who really considers the situation will recognize that the tax is simply a cost of doing business?
In my mind there is only one reason – These legislature are caught up in the corporate trap. They expect and demand corporate contributions to finance their desire for re-election. This is why ‘loopholes’ exist in the first place and why simply reducing or eliminating those loopholes will be short lived. As long as corporations are taxed the corporations with deep pockets will continue to lobby for loopholes and regulations that ‘benefit’ themselves and, at the same time, benefit the politicians that help obtain those loopholes. This is the vicious circle created by corporate taxation.
Worse than this blatant corruption is the advantage these loopholes and regulations give to the largest corporations by restricting competitions. This restriction of competition robs us consumers of innovative new products and lower cost products. (We pay twice. First by the being forced to pay the corporate tax in the product cost and second we pay more because competitive products are more difficult to bring to market.)
Then they will ask, who will make up for the loss of corporate tax revenue?
Again we have a simple solution. A solution that solves another Democrat complaint. Simply tax capital gains and interest earnings to individuals.
Today the Republican objection to taxing these earnings is that it represents double taxation. When corporations are taxed, taxing capital gains and interest earnings is indeed a double tax. But is there were no corporate tax there would be no double taxation. Additionally, the so called rich, who receive a large portion of their earnings from capital gains, would now pay a tax equivalent to the working stiff. This eliminates one of the great irritants of Democratic ‘fairness’.
It’s time we eliminated the corporate tax! Just think of the stimulus to manufacturing in the U.S. If corporations are looking off shore as a way to avoid or lower their tax burden (and this seems to be a fact), then by eliminating the corporate tax we should see a dramatic increase in these same corporations bringing their business back to the United States. Job creation would be dramatic. Products produced in the United States would dominate the world market.
What a stimulus!