Kill the Corporate Income Tax

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Megan McArdle thinks we should do away with the corporate income tax. I agree! Here is her most persuasive argument:

Without the corporate income tax, a lot of the incentive for lobbying would go away.  Not all of it, by any means — I am not trying to paint some halcyon future here. But an enormous amount of effort goes into lobbying for tax laws, and politicians often reward favored constituent businesses with little sweetheart fillips to the tax code. Conversely, apparently neutral changes to the tax code often turn out to be excellent ways to hamstring your competition, particularly small businesses who cannot afford a huge tax department.

And just think of all the corporate tax attorneys who’d be out of jobs.1 It’s a win-win!

Seriously, though: I agree. The corporate tax code is by far the most popular way for politicians to reward favored interests without making those rewards too obvious. As long as it exists, even if the tax rate is low, it’s a way to funnel money to one sector over another or one company over another. Just get rid of it.

The big question, though, is what to replace it with. Higher capital gains and dividend taxes are an obvious possibility. Higher top marginal income tax rates. A carbon tax. A financial transaction tax. There are lots of alternatives.

Of course, the business community would never support this. For starters, they like all the tax goodies they get, and they like the potential of getting more. And of course, businesses are run by rich people, and rich people would frankly prefer that taxes be high on their corporations than high on themselves. On a more substantive level, it would seriously raise the incentives for income shifting scams, so we’d have to amp up tax audits to catch that. So it’ll never happen. But it’s a nice idea.

1They wouldn’t be entirely out of work, of course. There would still be state corporation taxes to worry about, and multinationals would have international tax issues. But it would sure cut down their ranks.

THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

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