August 4, 2014

JUST TAX WHAT THEY CONSUME:

Why corporations shouldn't pay any taxes -- zero, zilch, nada (James Pethokoukis, 8/04/14, The Week)

Workers bear 70 percent of the corporate tax burden, according to the Congressional Budget Office. American Enterprise Institute economists Kevin Hassett and Aparna Mathur have found higher corporate taxes lead to lower wages, with a 1 percent increase in corporate tax rates associated with a 0.5 percent drop in wage rates. No wonder the OECD found corporate taxes to be "the most harmful for growth" of all taxes.

Indeed, the corporate income tax is so harmful that we should just get rid of it. That would really help America's struggling middle class. Economic modeling conducted by Boston University economist Laurence Kotlikoff finds "a very strong, worker-based case" for swinging the ax. Fully eliminating the corporate income tax, he writes, would cause "rapid and dramatic increases" in U.S. investment, output, and real wages. More investment means more jobs, higher productivity, and higher wages. Real wages of unskilled workers would rise 12 percent over the long term, and those of skilled workers would increase 13 percent. Now, Kotlikoff's findings are probably at the high end of estimates. But they are tantalizing nonetheless.

You can imagine, too, how multinational corporations currently based in low-tax countries might suddenly see the huge advantage of headquartering themselves in the no-tax U.S.

As we shift people into universal stock and HSA accounts, it is particularly importanbt to maximize corporate profit.
Posted by at August 4, 2014 1:59 PM
  
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