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Re: A good idea from the Trump campaign 

By: DigSpace in ALEA | Recommend this post (1)
Fri, 12 Aug 16 4:09 AM | 53 view(s)
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Msg. 19381 of 54959
(This msg. is a reply to 19372 by Cactus Flower)

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Yup, it is a tough sell among my liberal friends, but the corporate tax code in the US might actually lend credence to the Laffer Curve at least as it pertains to Federal receipts.


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The above is a reply to the following message:
A good idea from the Trump campaign
By: Cactus Flower
in ALEA
Thu, 11 Aug 16 7:14 PM
Msg. 19372 of 54959

Unbelievable, but true. I actually agree with the Trump campaign that Corporation Tax rates in the US are way too high.

What does this mean?

First, corporation tax is a form of double taxation. Employees are taxed on their income. So if higher profits are cycled through income (and hence income tax), a government gets its bite of the cash flow. Lower corporation tax will likely have a corresponding (although likely unequal) increase in income tax. Income tax is a perfectly decent way to accrue tax revenues.

Second, high corporation tax encourages companies to spend on other things so as to reduce the burden of tax on cash flow. Is a government wise enough in the way it defines costs to encourage a company to invest wisely? No. This is not what governments should be doing.

Third, corporations contain highly portable streams of income. If a country has onerous taxes, that stream of income will move off shore. Why should companies be patriotic? They aren't people in the same way as flesh and blood humans are. A corporation is a form of synthetic person, with totally different loyalties. It may have shareholders from different countries. Getting a competitive corporation tax rate serves the interests of the company's owners. Maintaining an exceptionally high corporation tax rates gives companies a strong incentive to move out of the US.

For myself, I think a rate in the 20-25% area is reasonable. US Corporation Tax rates are some of the highest in the world.


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