Eliminate corporate taxes? You bet, because it makes sense.
But rescind corporate subsidies and the Bush tax cuts to the richest 10%!
Increase tax progressiveness, and reduce taxes with public funding of elections.
High taxes are caused by many things. Inefficient government and its programs, stupid and unneeded projects and policies, and worse, government giveaways to corporations and wealthy campaign contributors.
Federal: The extreme right-wing has hijacked the federal system using campaign contributions as its weapon. To the detriment of national security Bush has cut resources vitally needed to win the war he started. But this is a story for a different day, except to say that $3000 per taxpayer per year is spent to support the tax breaks for the rich, industry subsidies, and no-bid contracts that would be eliminated if we'd just fund the elections ourselves. The cost to fix the system with public funding of campaigns: $10 per taxpayer at the federal level.
State: Legislatures are no better. The average Wisconsin taxpayer is charged $1300 to cover the costs of state grants, tax breaks, subsidies and no-bid contracts that legislators use to reward their contributors. The cost to fix the system with public funding of campaigns: $5 per taxpayer at the state level.
Importantly, the special interests that win all of these tax breaks give campaign contributions totaling about $10 per taxpayer at the state level, and they receive $1300 of taxpayer assets in return. And then the corporations add all of their lobbying to the price of their product and the consumers reimburse them at the cash register.
The taxpayers could do the job for half that amount ($5) under a public funding system similar to that in Maine and Arizona. Taxpayer-funded elections would eliminate the $1300 shelled out to the special interests, thus the $5 would be a bargain at 100 times the price. For details on how the Clean Money electoral system works see http://www.wicleanelections.org/how-it-works.html.
It is easy to vacillate on the corporate tax issue, but the bottom line is that our tax system is broken because it is manipulated by campaign contributions. And since corporate taxes are providing an even smaller percentage of federal revenues anyway, from 21% in 1962 to 8% of overall government revenues today -- and with some of our most profitable companies paying no taxes at all -- why do we tax corporations at all?
I’ve come to believe that we should just eliminate corporate taxes altogether -- and the loopholes they foster -- and put the entire tax burden on the middle and higher income earners. We pay the corporate taxes anyway, when they add their expenses to the price of their product and we reimburse them at the cash register. This makes these taxes regressive as they hit the low-wage consumer harder than the wealthy, and it makes it more difficult for American corporations to compete with foreign product, thus jobs are often sent to other countries.
So why not just pay the taxes more directly and make US products more competitive and US jobs more plentiful? That would reduce the lobbying for loopholes and the complexity of the tax system and the company moves to Bermuda. The expense of avoiding taxes via a costly accounting department and consulting firm would also be eliminated, all of which would reduce product prices. But if we are to eliminate corporate taxes, we must also eliminate state and federal subsidies to corporations!
Frankly, a better system would be to put corporate taxes on a sliding scale depending on (a) the ratio of their highest-paid executive to lowest-paid worker compensation, and (b) their ratio of US workers to foreign workers. If executive salaries are reasonable and they keep most of their jobs in America, their taxes would be zero. As executive pay and outsourcing increases, so does the tax rate, maxing out at a minimum of 30% of profits. That would surely give the Board of Directors something to think about when setting CEO salaries and deciding on outsourcing. And all compensation would have to be included (like benefits, stock options, bonuses, retirement pensions and severance packages). If the company is making gobs of money and can afford to pay windfall CEO salaries, they can also afford to pay higher taxes (though at the cost of losing competitiveness). And of course, a method must be included to tax companies higher if they locate in a tax haven to avoid this system altogether.
Low-income: Those making below $25,000 per year should not pay taxes at all, but those without a job and collecting unemployment, welfare or food stamps should have to perform community services for the 20 hours per week they are not seeking employment.
Middle income: I favor a flat tax on incomes between $25,000 and $150,000 per year, though the tax preparation and accounting firms might not like having to then find other sources of income.
Upper income: They should pay on a more progressive basis. Let me restate that this could be righted by simply repealing Bush's unfair tax cuts he's given since 2000, including what is now an estate tax but the Bushies like to call it a death tax. I call it the Paris Hilton tax.
All income should be included in all tax calculations and taxed the same (wages, capital gains, interest from savings, investments, etc) and the current caps on social security and FICA taxes should be totally removed.
A fair tax system will ensure longevity for our democracy and fairness to future generations. But what matters is whether our economy must be sustained on the backs of the the rich or the poor. And since the rich are the only ones giving campaign contributions, it is clear where the politician's allegiances will be.
Jack Lohman
Resources: Institute of Taxation and Economic Policy and its Guide to Fair State and Local Tax Policy