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.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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