Do you believe corporations have too much influence in Washington?
There’s one simple way to remove a signficant portion of that influence and revive the economy at the same time.
But you may find it radical…
Abolish corporate income taxes.
If this idea seems strange or even abhorrent to you, then please read this letter I sent to my Representative and Senators and consider the arguments…
In his State of the Union address, the President frequently threatened to tax corporations for doing things he doesn’t like and recommended tax breaks for corporations he likes. http://bit.ly/yT5Trp
Instead he should’ve called for the abolition of ALL corporate income taxes.
You don’t have to be a conservative ideologue to oppose these taxes. They simply don’t work…
- Corporate income taxes bring in only about $200 billion in a year – far less than 10% of revenues and about 1/7 of the deficit.
- The only nation with a higher corporate tax rate is Japan, which has been in a slump for 20 years.
Taxing corporations is NOT a form of taxing the rich, because shareholders include the pension funds and 401(k)s of the middle class and retirees. Not only that, but corporate taxes kill jobs and stifle wages. Here’s how…
- When adding in the cost of compliance with the tax code, corporate taxes cost corporations about $250 billion per year.
- Tax compliance costs PER EMPLOYEE range from $517 in large firms to $1,584 in small firms (http://archive.sba.gov/advo/research/rs371tot.pdf, Table 1)
Companies pass on these costs through…
- Lower wages for employees
- Higher prices for consumers
- Less money for investment in innovation or job-creating expansion
- Smaller taxable earnings for shareholders
- Or, they leave the country altogether for a more business-friendly environment, killing even more jobs in the process
And that last point explains why most Americans sense that manufacturing jobs have left.
And these costs even work against the alleged goals politicians like you advocate…
- Less is collected from individual income taxes
- And MORE is spent on anti-poverty programs
Isn’t it fair to say that these costs are far greater than the revenues from corporate taxes?
The U.S. would gain a competitive advantage over every other country by simply eliminating the corporate income tax altogether.
- Corporations would relocate to the U.S., the new “tax haven.”
- Leading to better wages, lower prices, and more jobs.
- The expanding economy would quickly compensate for the “loss” of corporate tax revenue.
- The anti-poverty rolls would shrink and so would the burdensome expense of these programs.
Ending the corporate income tax would also mitigate corruption. Corporate influence in Washington would be reduced because companies can’t lobby for tax breaks when they’re not paying taxes in the first place!
This isn’t about ideology. It’s in the national interest to repeal the corporate income tax and to elimate similar taxes on non-incorporated firms.
Do your friends know that the U.S. has a higher corporate income tax rate than all of our competitors except Japan? Do you think they would find this letter interesting and persuasive? Then please share this message with open minds and encourage them to join you in taking action: http://www.downsizedc.org/blog/one-simple-act-to-create-more-jobs-and-revive-the-economy
Policy Research Director