I am pretty liberal, but I DO think corporate taxes should be lower. We should tax the money that people pull OUT of a business for personal consumption, not the money that is being used to drive the economy.
a) Yes, consumption drives the economy, but consumption does not 'multiply' like investment spending does. It would be much better for the economy for someone to buy a tractor than a speedboat, for example; the tractor is used to create more wealth, while the speedboat does not produce anything. We want to incentivize the investment type spending.
b) Yes personal consumption is already taxed. We would have to change the way and rate we tax to offset lost income, and do it in a way that is not regressive. If we get rid of corporate income tax, we can raise capital gains and income taxes on wealthy people without overly penalizing them.
c) Yes, you can obviously use money earned from one company to invest in another. A good tax structure would recognize that and encourage it.
I think all of this comes down to realizing that taxes do two things, raise revenue and drive behavior. We want to make sure the behaviors we cause are the ones we want as a society, while at the same time raising enough revenue to do the things government needs to do.
Personal consumption is the leading 'driver' (or one of them) of the U.S. economy.
I also don't see the distinction: Why shouldn't corporations pay their share, and why should private citizens have to pay more to cover it (taxes are a zero sum game)? Why is a citizen's personal budget somehow of little value, but corporate budgets are sacrosanct? I'm more concerned with protecting private people than corporations.
> corporate taxes should be lower
Lower than what? On what basis do you say they currently are too high (or too low)?
In short, corporations never 'take' income. It is the shareholders and executives who 'take' the income. Tax the money at that point, and at a level that offsets the loss of corporate income taxes. This would not be shifting the burden to other citizens, it is just realizing the truth that a corporation isn't a REAL person, it is a group of people, and those are the people who should be taxed.
I don't know there's such a thing in economics as 'taking' income. Money is taxed when it is transacted between entities; it's pretty simple. Buy something, pay someone, pass your inheritance to your children, etc., and it's taxed. (It's not taxed when it sits still.)
Now people want to give certain transactions a special status; for some creative reason, this time it's different. What I see is that the transactions that are 'special', such as corporate and estate taxes, benefit the same group of people. Also, the same people shouldn't have their income taxed as highly because they are more important than everyone - they are 'job creators'. How come it's never the taxes of the working class, such as sales tax, that need special treatment?
Yes, we would; one of the main reasons we don't currently is BECAUSE of the corporate income tax. Currently, capital gains are 'doubly' taxed, first as corporate income and then as capital gains. We can offset a decreased corporate income tax by increasing capital gains taxes.
Indeed. I do wonder what the right offset would be to minimize the impact on government revenue.
In any case, unfortunately, I've yet to hear the political advocates for corporate tax reduction/elimination argue nearly as vociferously for an increase in capital gains taxes.
a) money pulled out of business for personal consumption isn't driving the economy? - that's how other businesses make money
b) personal consumption isn't already taxed? That's what sales tax does right?
c) money pulled out of businesses isn't used to finance other businesses? eg. I live off dividends from my index funds while I bootstrap my startup.