If so, why would you allow a corporation to determine how to determine the indirect tax rate? An indirect tax rate would be determined by elasticity rather than ability to pay. Since a poor person consumes more inelastic goods than a rich person, they would inherently shoulder most of a corporate tax.
Further you're ignoring the fact that companies engage in all sorts of activity specifically to minimize their tax obligations. They spend a considerable amount of the budget managing tax compliance. Amazon closed a distribution center in Texas to avoid collecting sales tax from their customers. (http://articles.businessinsider.com/2011-02-14/news/30098776_1_sales-taxes-comptroller-amazon) Many others are leaving because their Franchise Tax is prohibitive in an otherwise pro-business state. This is not tax evasion. It's tax strategy and we have built a tax system to encourage businesses to act in inefficient ways.
There might be many reasons to close any given location. But taxes shouldn't enter the picture*. Taxes should be distributed in a way that it does not warp typical market behavior. Most corporate taxes inherently fail at this because corporations don't have to pursue profits. They can instead expand and buy more operating capacity. They don't need to own land. They don't need to have a large work-force. They don't need to be capital intensive. They can dissolve without anyone actually having to die. They are inherently flexible and can change their behavior under the slightest provocation in a way that ordinary people cannot.
That inefficiency is a cost. And there's no reason to think it doesn't add up to 230 billion. It might not add up to 230 billion in the coffers. And it might fall short of 230 billion, after all the calculations are said and done. But the opportunity cost is much larger than the amount the IRS spends to administer the Corporate Income Tax.
*I am a fan of Pigovian taxes/breaks. But these are not be designed to raise revenue. If a Pigovian tax works, the undesired activity is avoided and the revenue is minimal. Revenue-generating taxes should avoid promoting or discouraging any given behavior.
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Date: 23/2/12 06:54 (UTC)If so, why would you allow a corporation to determine how to determine the indirect tax rate? An indirect tax rate would be determined by elasticity rather than ability to pay. Since a poor person consumes more inelastic goods than a rich person, they would inherently shoulder most of a corporate tax.
Further you're ignoring the fact that companies engage in all sorts of activity specifically to minimize their tax obligations. They spend a considerable amount of the budget managing tax compliance. Amazon closed a distribution center in Texas to avoid collecting sales tax from their customers. (http://articles.businessinsider.com/2011-02-14/news/30098776_1_sales-taxes-comptroller-amazon) Many others are leaving because their Franchise Tax is prohibitive in an otherwise pro-business state. This is not tax evasion. It's tax strategy and we have built a tax system to encourage businesses to act in inefficient ways.
There might be many reasons to close any given location. But taxes shouldn't enter the picture*. Taxes should be distributed in a way that it does not warp typical market behavior. Most corporate taxes inherently fail at this because corporations don't have to pursue profits. They can instead expand and buy more operating capacity. They don't need to own land. They don't need to have a large work-force. They don't need to be capital intensive. They can dissolve without anyone actually having to die. They are inherently flexible and can change their behavior under the slightest provocation in a way that ordinary people cannot.
That inefficiency is a cost. And there's no reason to think it doesn't add up to 230 billion. It might not add up to 230 billion in the coffers. And it might fall short of 230 billion, after all the calculations are said and done. But the opportunity cost is much larger than the amount the IRS spends to administer the Corporate Income Tax.
*I am a fan of Pigovian taxes/breaks. But these are not be designed to raise revenue. If a Pigovian tax works, the undesired activity is avoided and the revenue is minimal. Revenue-generating taxes should avoid promoting or discouraging any given behavior.