Well, maybe that would be a result of my suggestion. But, the flip side of that is less work to push paper on shell legal entities or check the box LLCs.
The point being, corporations create this vast array of complex structures to minimize income taxes. To segregate transaction streams. To play around with their state apportionment. To insulate IP payments from tax. To incorporate overseas.
I think if it’s a small enough fee, no one would change how they do business. $10 per year. Even the local pizzeria can afford that. $500 per year. Goldman Sachs would send it with candy and strippers.
You could cap it. $25 per entity up to a maximum of $500 let’s say. It’s not about incentivizing or restricting the number of corporations. It’s a simple way to get money. No calculation. 1/2 page form.
“Thank you for the privilege of doing business in the United States. Here’s $25. See you next year”
To abolish the IRS as it is now and move toward a consumption type of tax would require a well thought out transition plan. Does everyone remember Herman Cain’s 9-9-9 plan. It was really a transition plan to something like the “fair tax” (Which I think is the popular name for a consumption tax.) I don’t know if an real details were realized on it. I do applaud Mr Cain for at least having the guts floating it as a campaign idea and starting the discussion. The danger of course is have it evolve into a European style VAT and maybe get stuck in between two. There were a lot of people on this site absolutely adamant against it. (They probably had rice bowls to defend!) It makes the most sense economically & has the added benefit of encouraging savings which we desperately need more of!
It still doesn’t answer the issue regarding people like Warren Buffet who have enormous wealth but pay little taxes and as such are happy to see the “hoi polloi” middle class pay the lion’s share.!
If you tax something, you get less of it—always. Your proposal will result in fewer companies.