Corporate Taxes

Some Back of the Envelope Nerdery on Corporate Taxes «  Modeled Behavior

I'm not against cutting or even killing corporate taxes but I see a couple of problems. I think their elimination would add to our already increasing wealth and income inequality and though there would be an economic gain initially, I don't think the gains would be that great in the long run.

The increased profits generated by the tax breaks would be shared by the owners, the workers, and the consumers but it's the owners than stand to reap the most. These same owners, our current political and corporate elite, already control most of the country's wealth and take the most of income so cutting the corporate taxes rate will just allow them to take more. This can be easily offset by increasing taxes on the rich but we know how that goes. So,.. cutting corporate taxes, without additional taxes on the wealthy, will mean the rich get richer while the rest of us wait for the trickle-down.

There would be an initial economic boost as companies move into the US to take advantage of the low (or zero) rates but it seems a temporary gain. Eventually others countries would follow with their own tax breaks, leading to a global race to the bottom of no corporate taxes anywhere. I think we already see some of this in the US as localities compete against each other, bending-over-backwards with tax breaks to lure companies into their areas. At some point, when the coporate tax rates have bottomed out around the globe we'll be back to competing on labor prices alone and we're not going to win that race.

Still, cutting corporate taxes to zero and taxing at the individual level seems like a better way to go, cleaner, simpler, no double taxation. We just need to make it fair.

tnb