| It is literally impossible to charge corporations on income instead of profit. Let's walk through an example. I call a plumber to replace a water heater, which they provide. They charge me retail for that water heater. Plus sales tax. Now of course, they have to charge me corporate income tax for that whole amount. Including the sales tax, by the way, because that's income. The hilarity doesn't end there. The plumber bought the water heater from the manufacturer. Let's assume that was at some discounted rate, maybe a 20% discount off of retail. Ok, so 80% of the retail value of that water heater is income to the manufacturer. They have to pay corporate income tax on that whole amount now. But wait, corporate income tax was already paid for 100% of it by the pluming company. We're still not done. It turns out that water heaters are a commodity and there isn't much margin in the business. They already can't afford to pay the corporate income tax, but it still gets better. All the manufacturer does is assemble the parts. They buy the parts from other companies, and some components go through multiple companies. At each step, each of those components was income for the manufacturer or assembler of the part. Basically you end up triple taxing or more, the various parts of the system. Believe it or not, it gets worse!!! An astute observer would notice that the easiest way to avoid as much corporate tax as possible is vertical integration. In other words, if the plumber, water heater manufacturer, and all of the subcontractors and sub-manufacturers involved all worked for a single giant corporation, they'd only have to pay corporate income tax once on the water heater and all of the components within it. In short, companies would be forced to move to countries that did not implement corporate taxes. Companies that are unable to do that would be forced to combine into as few companies as possible to avoid corporate taxes. Remember, taxes discourage the behavior that is being taxed. Corporate income tax discourages the transfer of money between corporations. That just means there would be fewer, larger corporations. And of course, more expensive goods and services. Assuming the entire world implemented corporate income tax simultaneously. Without that, there would just be massive shifts of businesses away from countries with corporate income tax. |