Posted on 12/02/2016 2:58:01 AM PST by expat_panama
Economic research shows that the corporate tax is harmful to workers' wages and overall economic growth. If left to their own devices, politicians still wouldn't be likely to reduce or eliminate the destructive tax. They only act when tax competition—whereby taxpayers shop around for favorable tax environments—forces their hand.
That's why it is alarming that House Republicans—I repeat, House Republicans—are talking about a change to the corporate tax that would insulate it from competitive pressures going forward. The change in the Ryan-Brady blueprint (as in Speaker of the House Paul Ryan and Chairman of the Joint Economic Committee Kevin Brady) would turn the corporate income tax into a "destination-based cash flow tax" with many similarities to European-style value-added taxes. To be sure, it would also lower the U.S. corporate tax rate—which is currently higher than any other in the developed world—and move to a common-sense territorial system in which income would be taxed only in the country where it was earned. It would also alleviate some of the double taxation of savings and somewhat simplify the tax code, even as it could become a compliance nightmare for companies...
...future politicians would have little incentive to keep rates down.
This is just a recipe for bigger government, as Europe discovered when it instituted the very similar value-added taxes. In part because of their regressive nature—yes, VATs hit lower-income taxpayers the hardest—they are revenue engines and have helped fuel the dramatic growth of European governments in recent decades.
Academic supporters of the new tax admit that their goals are to grow government and institute more progressive tax burdens. Republican lawmakers think they need it to trade for lowering the corporate rates, but they ought to know better than to hand future Congresses the means to easily power government growth.
(Excerpt) Read more at reason.com ...
Gov't control of the economy is stupid.
Isn’t this effectively what Europe does? Is the article saying they’d leave the corp rate at 35% and lower exports to 0% or they’d lower the corp tax rate to 15% and lower exports to 0? If it’s the latter, I’m fine with that although I’d strongly prefer a 0% corp tax rate across the board and make it up with slightly higher income taxes on the top 5% (of which I am currently in) and import tariffs.
The term “Corporate Taxes” is a scam. Corporations don’t PAY taxes. It all gets passed on to the citizen taxpayer in the prices of that corporation’s products. It’s merely a tax-and-spend ruse to fool the gullible.
In the long run, a lot of it hits the consumers; but it’s mistaken to believe that it doesn’t also cut the return of capital to investors as well (or additional capital investments and labor as well since less can be spent on labor). Take LaQuinta or WFM - they pay roughly 40% taxes on profits. If it drops to 20% total (after fed drops to 15%), it’s not like they are going to cut prices across the board by an amount equal to their tax savings - some of it will. But ultimately the corporation doesn’t pay taxes as you say. The tax is born by a combined group of consumers, investors, and laborers. At the very least, dividends should be tax deductible.
McCain and Ryan are showing in EXACTLY why
the GOPe MUST be decimated.
I guess the good thing is that Obama would veto any tax cuts, so it can’t happen under him, and we will have a Leader for President very soon - he will be their tiller despite their efforts to screw it up.
Later
I never see it mentioned, but to me, complexity in the tax code benefits only one group - politicians. Combine with high rates and you create incentives for special interest lobbying.
Step 1 - pass a complex tax law.
Step 2 - start adding special exemptions bought by campaign contributions.
Step 3 - announce the new exemptions are for a “good purpose.”
Increasing wealth is about increasing productivity. Hiring smart people to fill out reams of tax forms does not produce any more motor scooters or face cream. If it’s not produced, it cannot be consumed.
If rates are low and calculations simple, it’s just not worth it to chase every deduction. Let’s make it so the natural incentive to make money (by making more stuff and making it cheaper) is preeminent.
There is no hope until immutable economic principles are learned.
They are doing their owners bidding, the Chamber of Crony Commerce and make no mistake the GOPE is bought and paid for like any slave in the past present or future. They will walk out and do or say whatever their masters bidding may be and the country be damned. Trump needs to tear the CoC a new one.
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