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

[fizzyland.livejournal.com]

Take it up with the OECD - it's their calculation.

[politikitty.livejournal.com]

It's not their calculation. It's an unsubstantiated remark that relies on any number of unspoken assumptions. Does it consider only the federal corporate income tax? If so, it's missing out on about 75% of business taxes in the United States. If it's referring to the low tax collection as a percentage of GDP, there's an entire myriad of distortions there from cultural tax appetite to differing factors of GDP.

If I had 91 dollars to send the OECD, I'd gladly find out. In the meantime, I gave the The World Bank's analysis on tax rates complete with their methodology. As far as I know, the OECD has not criticized these numbers or find them to contradict with their findings in the slightest.

It bothers me that people drastically underestimate the amount of taxes, and the cost related to that compliance, any given American corporation pays. Facts are facts, and ignoring them because they're inconvenient is just bad news. But in the end, it doesn't matter if America is keeping up with the tax-Joneses. It doesn't mean that corporate taxes are good. They're highly distortive and regressive in nature. The rich can throw away money and laugh about the waste. But this actually means less jobs and higher prices. While it sounds very boring and dry to you, these are indirect causes of the exact sort of poverty and harm that you're supposed to have a soul to worry about.

So even if that's what Europe has, that doesn't follow that it's what America should strive for.

[fizzyland.livejournal.com]

I was going by the info in the Washington Post article - that was a direct quote from it.

[politikitty.livejournal.com]

Exactly. It has very little context and could have a myriad of different implications or explanations. It's lying with statistics, and I take issue with you taking that quote and thinking it is such an important factoid it should effectively shut down discussion about corporate taxation.

You were the one who said "I think we're done here and if you disagree I will have to refer to you as a "lunatic" that refuses to take an "adult" approach to the issue of taxes"

[fizzyland.livejournal.com]

That's a reasonable complaint on your part.

I have an issue with the OP that colored my response - had anyone else posted this topic I would have simply answered that I support some level of corporate taxes, albeit with a combination of reduced rate and closed loopholes.