[tasty_freeze]

I'm not an economist, but not taxing corporations leads to increasing income inequality, and gives companies the wrong economic signals.

It costs money to run the government -- the court system, the armed forces, the legislatures, the police and fire departments, etc. Companies consume these resources and that cost should be factored into the cost of their products. In fact, it seems pretty obvious to me that especially large corporations use these resources far more than individuals. When was the last time you were able to lobby congress to write laws to your liking, or create trade agreements, or author a bill to advantage your financial interests?

Back in the 50s in the US, companies paid about 30-35% of total tax revenue and the gears of industry still turned fine. Now it is about 7%, and people complain that it is too much and is harming the economy and stifling progress.

If companies were taxed at a higher rate, yes, it would change things. There would be winners and losers, but a new equilibrium would be established soon enough. Dividends would be lower -- yes, so what? The economy is already too geared towards rewarding unproductive stock market games and the lopsided part of that goes to the people who are already well off. Dropping taxes to zero for companies would make things worse. Rich people wouldn't consume more and would just reinvest their increased dividends, while working people would have to make up the loss of tax revenues either through increased personal tax or loss of services.

[kogus]

  When was the last time you were able to lobby congress to write laws to your liking, or create trade agreements, or author a bill to advantage your financial interests?

That's exactly my point. Corporations have all kinds of power and leverage when negotiating with politicians regarding their tax burden. That's what leads to corruption. Corporations don't even exist as anything other than a legal framework. When you tax a corporation, you are by definition taxing the investors in it. The corporate framework gives those individual investors cover to avoid paying their taxes.

I'm suggesting that you bypass the problem by eliminating corporate taxes, and replacing them with taxes on investors, who individually would not have the leverage to avoid them. As an added bonus, you'd deprive politicians of a powerful tool that they are demonstrably incapable of wielding fairly and effectively.

[mikepurvis]

> I'm suggesting that you bypass the problem by eliminating corporate taxes...

The problem doesn't go away— there are a hundred and one ways that companies can receive favours from the government other than tax breaks: land giveaways, pollution exemptions, utility discounts, trade/tariff deals, infrastructure like highways/rail/fibre being routed in such a way that benefits their locations or supply chains, etc etc.

If your government officials are corrupt or untrustworthy, that's a problem to deal with at the source, not by trying to tie their hands by taking away some of the tools they use to set policy.

[proxyon]

You're missing the point hard. You can still tax the corporation by taxing everyone who earns income from it. You just don't tax the business entity itself.

[somethingwitty1]

You aren't taxing the corporation, you are taxing an individual. We can pretend that is somehow a tax on the corporation, but it isn't. Corporations hold vast sums of cash that isn't "income" to an individual. That money can/is used to enrich the upper-levels of those corporations, outside of becoming "income" for them. "Business" dinners. "Business" travel. "Business" retreats. You could try to create complex tax laws to make people individually liable for it, but good luck enforcing that or writing them in a way that doesn't leave loopholes open for the wealthy. You had a business lunch to try and seal a new deal? Guess what, you all now need to file that as personal income and be taxed at 25%, including the people you were treating. That team celebration for a successful launch? Each team member owes 25% of whatever was spent on you (hope someone was tallying it all correctly).

[proxyon]

I think you're misunderstanding some of the moving parts here. All of those deductions you described would be taken either way, whether the tax is on the individual or on the corporation. They are already taken today to shave down corporate tax liability. So at best, the objection you're raising is a zero sum game. But even worse than that, and as a matter of fact, there would be less incentive to fulfill all of the compliance burden of tracking those deductions if corporations were not taxed but individuals were.

[mikepurvis]

I don't think it's workable because it creates all the wrong incentives around hiring:

- Foreign workers will be even more competitive than they are today relative to domestic (because they won't have to be compensated for the additional income tax burden).

- Capital expenditures, automation, etc will all be more competitive vs. hiring workers.

- Companies look for even more non-worker ways to spend cash, such as increasing their political power via lobbying.

Maybe none of this is bad long term, or it all comes out in the wash eventually, but trying to sell this in the short term sounds like political suicide to me— I don't think the purported benefits of 0% tax on corps is even remotely worth it. Corporations benefit from government services; they can pay taxes directly on the value they generate.