Sunday, April 17, 2011

How About a Zero Corporate Tax Rate? (video)

The following comes from a spirited debate, via email, I had with a good friend last Friday. Prompted by that day’s post Get Fat Cat.

He stated: “The real problem I have is with USA corps being allowed to avoid any taxation at all on monster profits because of the way their lobbyists write tax law for our congress to pass. Think GE. and before you start……….screw their stock holders……….we should all pay “friggin” something. You are a fair man…..certainly on this we can agree.”

My reply: “How about a zero corp. tax rate? There’d be less lobbying, much more capital investment, and substantial economic growth. Ultimately individuals pay all the tax in one way or another anyway.”

He got the last word with something about my zero chance of ever holding public office due to my frequent use of “friggin” and, as evidenced by “crap” such as the disgraceful notion of no corporate tax, that I have surely “slipped into using drugs”.

The funny thing is, aside from being sober, I wasn't trying to be funny. Indeed, what is a corporation? Is it not an inanimate entity? Is it not simply the things "it" owns – i.e., buildings, equipment, inventory, etc.? And, as Milton Friedman pointed out, buildings don’t pay income tax, people (customers, employees, and, yes, stockholders) do.

Think about it; the existence of a corporate tax, as my dear friend suggests, allows for the politician to effectively divert private-sector profits into campaign contributions. I’d go so far as to say that if we were to eliminate it altogether, and thus the lobbying it inspires, overall tax receipts would grow significantly.

I therefore retract my prior pleas for a more business-friendly government. Clearly, we don’t need, nor should we want, our policymakers to be more business-friendly. What we need is for them, aside from enforcing laws protecting one man from harm at the hands of another, to friggin stay out of business altogether.

As for my friend’s assertion that I’m a fair-minded man, I prefer to think myself a free-minded man. Freedom is an easily distinguishable concept; fairness on the other hand is entirely subjective. And truly, as Mr. Friedman so aptly put; “a society that puts fairness before freedom will get neither, while a society that puts freedom before fairness will end up with a great degree of both.”


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