[haneefmubarak]

I agree with you to an extent, but I've often heard the argument that in that case wealthy individuals would just place all of their finances in a corporation and never have to pay any taxes whatsoever. How would you address this?

[riskable]

This one is easy and points out another problem: The ability of businesses to write off expenses.

The cost of goods inside airports would be significantly lower if business travelers couldn't just expense everything they buy. As long as it's max 1/3rd of the usual food allowance businesses can charge that amount and be assured that business travelers will pay.

If you take away corporate taxes then "expensing" will go away entirely. Along with all those receipts you have to save and the entire industries and businesses that profit from it (e.g. fake receipt producers, Concur, etc).

Wealthy individuals wouldn't be able to expense their purchases through subsidiary corporations anymore which would necessitate collection via sales tax. If you think that's an awful lot like the Fair Tax system you're not far off.

I'm actually not an advocate of the Fair Tax or even a Federal-level sales tax because it would be very regressive: Vastly unfair to the bottom 50% of society. Having said that, if you abolish corporate taxes it's one of the only ways to obtain tax revenue.

[speleding]

Storing money inside a corporation is actually something that happens a lot already. I'm not sure that's a problem, because eventually the money has got to come out of the corporation if you want to do anything useful with it, and it will be taxable then. There are countries that have a flat yearly tax on capital, which would be one way of getting at it, but anything you do would make money flee the country. In my opinion it's more fair, and easier, to tax a flow (labour, sales, pollution) instead of a stock (bank account).

[cmdrfred]

Or when the corporation buys a luxury car and the CEO leases it to himself for $1/year (this is a very common tax avoidance tactic, as the car is for "an employee" they call that lamborghini murcielago a business expense). There are too many loopholes to fix in my opinion. Why tax earnings as opposed to assets anyway?