Why a Corporate Tax Rate at All?

[badlydrawnjeff.livejournal.com]

Today, President Obama unveiled his latest plan to reform the corporate tax structure. I'm not too curious about the community's thoughts on this overall since I'm fairly sure we all know where we all sit on Obama making good/bad choices here, but I do have a more general question:

Why have a corporate tax rate at all?

I'd like to think we all agree on these basic points:

a) The corporate tax rate is not really paid by the corporation or business in question. Taxes are simply another cost that is levied on a company, a cost recouped through fewer services, lower wages/employment, higher prices, or some combination therein. It's not an issue of "fair share," really, since we're all paying it.

b) Our corporate tax rate is comparatively high when stacked up against other nations. We're #1 in the OECD at 35%. Canada, directly to our north, is at 15%. And that's without factoring in the corporate tax rates of individual states. Whether you think this matters much is up to you.

c) We only tax profits, and that's proper: If a company doesn't make a profit, it's not paying that tax rate. It's one reason why many corporations don't end up having a tax obligation.

d) We offer a lot of tax credits and opportunities to lower the effective rate: From green energy tax credits to employment credits, even profitable companies are able to reduce their effective rate to zero - or lower.

e) Corporate taxes account for a fairly small amount of overall receipts: Well under $250b in 2010.

So the question I pose is this - if you're in favor of a corporate tax at all, why? Is it worth it given what we all know and agree on? Is the value of getting $220b in revenue from the corporations worth it?

Comments

[politikitty.livejournal.com]

Uh, corporations pay for the bulk of public school via property taxes. The richest school district in Texas is where the last of the oil fields are held by Chevron, Exxon and the like. Does that mean they should have more say than parents?

[soliloquy76.livejournal.com]

Pretty sure I said "federal" taxes.

[politikitty.livejournal.com]

The logic is still the same. If you think that taxation gains a corporation rights on one level of federal government (campaign contributions, whatever) it should follow for all levels. I can understand limiting discussion to the federal level because it has the most familiarity. But that's admitting that your logic is flawed, but you're willing to put the federal income tax on the table if you get an unrelated win on your side.

It's a fair political argument. But it's negotiating, not a reasoned theory of taxation.

[soliloquy76.livejournal.com]

Of course it's a flawed argument. I'm not a poli-sci nerd. :P