The article also says that the only way that Obama's "ambitious social agenda" can be funded is by increasing taxes on those making over $250k and on businesses. Apart from the fact that reform of medical care should save money, this is nonsense. Tax income can and should be increased by increasing the median income, which is far short of $250K (though such an increase would probably also increase the percentage of those making over $250K). This is what an ambitious economic program should be doing, not redistributing money in a feudal framework.

More precisely, the income tax taxes corporate income once and only once. Businesses choose to organize as corporations because they want the business to be viewed as separate from its investors for purposes of contract and tort: only the business, not the investors, is responsible for its debts. It is entirely appropriate, therefore, that the business also be viewed as separate from its investors for income tax purposes. The corporation pays its taxes on its income, just like it meets its obligations out of its assets. If it pays dividends or interest, investors -- who are legally separate because they are not responsible for the corporation's debts -- then have to pay taxes on their own income, not on the corporation's.

This is no more double taxation then it is when I hire a handyman after paying my taxes and the handyman also has to pay taxes. We each pay taxes on our own income.

Regarding the corporate income tax, I hadn't looked at it that way before. Good point. Even so, I'd prefer to see corporations treated like REIT's. That is, maybe they shouldn't have the option to pay corporate income taxes in exchange for the benefit of retaining earnings. Force them to distribute their taxable income. This would result in more and earlier taxation at the individual level. It would also:

1. Make it clearer to all shareholders which companies are producing value and returns.
2. Address the falsehood that corporations can pay taxes. They can't - only consumers, workers and investors can pay taxes.
3. Make our tax system more progressive - if the dividend is received by a rich person it would be more heavily taxed than if it is received by a poor person. If it is received into an IRA or a foundation, it wouldn't be taxed. It would also simplify our tax code. For instance, the silly 15% tax on dividends (which is also fraught with stupid complexity) would now be unnecessary as the income is no longer taxed at the corporate level.
4. Lead to better corporate governance - see #1. Companies that thought they had a valuable investment opportunity would be more likely to have to raise the capital in the debt or equity markets. This increases transparency and shifts power from management to owners and investors.
5. Make stock options more meaningful in that they would reward the creation of true value, not simply the hoarding of a company's income in bank accounts or through stock repurchases.
Related notion: Since corporations won’t be paying taxes, they should be banned from making contributions to political campaigns. Those contributions should be made by the true constituents; consumers, workers and investors. I'd say the same thing about charitable contributions, but it's not as important to me.

The "taxed twice" line is standard issue from conservative anti-government folks. It has never been true most of the time they invoke it, and it has never been relevant in the context where it has any bit of truth to it.

The Washington Post's alacrity in recycling trite soundbites is not a masked editorial as Dean Baker suggests. The Post is simply incompetent in writing about economics.

Dan G (and. of course, Dean),

Your points are so obviously correct that even an NPR "economics" reporter might get it. WaPo, as a big corporation, and its byline reporters, who are financially benefited by dividend, etc. income, are personally interested in making the nonsense 'double- taxation' arguments.

Someone should drive a stake through the heart of the "taxed twice" argument. Everyone pays taxes more than once on income--whether a corporation or a mere individual paying, for instance, a DMV fee to register a car with income on which she has paid income tax. That assertion is just DUMB.

skeptonomist wrote, This is what an ambitious economic program should be doing, not redistributing money in a feudal framework.

Actually, we do redistribute money in a feudal framework.

It's called "paying rent."

It's not dumb, it is just self-serving.

The mistake most people make is thinking that the people feeding this tripe to the WaPo are actually making an economic argument at all. Instead hey are working back from a conclusion.

The argument against corporate tax is different from the argument against tax on dividends which in turn is a little different from the argument against tax on capital gains which in turn different that the arguments against the estate tax and for the flat tax. You get Congressional Republicans pushing for some on one rationale and Cato and AEI pushing using some other rationale and Steve Forbes pushing others using arguments about compliance costs.

All of which blinds you to the point they are working from. These people firmly believe that gains from capital should simply not be taxed at all.

If you eliminate tax on dividends and tax on capital gains and taxes on estates then in combination you have eliminated all tax on capital accumulation at all. And to the degree that corporate taxes reduce amounts available for distribution eliminating them has the same effect.

Now they can't get away from presenting this as a package deal as the "Billionaires Tax Freedom Act of 2009", they always need to have some plausible cover as in 'double taxation' 'family farm' 'small business' 'compliance cost' , but if they put their whole agenda into place no Walton heir would ever need to pay a dime in federal taxes ever.

Titles of Nobility in Continental Europe were mostly valued because they came with a tax exemption, which explains why you can't throw a stick in Germany without hitting a Count or his Eurotrash kids. But even the greediest would be noble never dreamed of a deal this good.

Steve Forbes doesn't believe he or Paris Hilton have any responsibility to fund federal spending. This goes beyond being born on third base and thinking you hit a triple, instead it is more like being born in the Owner's Box and thinking you hit a game ending grand slam.

Leona Helmsly captured the sentiment quite well: "Taxes are for little people"

Once you understand that the starting point is always that same ending point you will stop wandering why you get ridiculous arguments about 'double taxation'. They don't have to make economic sense, they just have to serve their purpose. Which is eliminating tax on the wealthy.

The best move Obama could make would be to impose the full social security tax on all income above $250,000 and to impose a special surcharge of 10% on all income above $500,000 (based upon gross income) to expire after 10 years.

These increases should be coupled with an elimination of the alternative minimum tax on taxpayers with a gross income below an indexed threshold of $250,000.

The results would be (a) saving and preserving social security, and (b) reducing the incentive of corporations, particularly Wall Street firms, to pay the obscene bonuses now being paid.

Given the current mood of voters, the support for these proposals might extend to several Republican senators.

'Real' entrepreneurs are too busy expanding their businesses to have much income to tax. Only spendthifts have worry about that.

The very wealthy should have a progressive tax rate just like the middle class has a progressive tax rate. As it is now, the wealthy have a flat federal tax of 35%.

A small business entrepreneur who ends up the year with any taxable income is doing something wrong.

FIRST, DEAN RULES!

SECOND, I AGREE WITH TL AND RON ALLEY. MOST SMALL BUSINESS OWNERS FIND SOME WAY TO CLAIM MILEAGE OR OTHER EXPENSES TO REDUCE THEIR NET INCOME.
ALSO, I HAVE SEEN IT QUITE COMMON HERE IN MICHIGAN WHERE COMPANIES ESTABLISH SEPARATE CORPORATE ENTITY HOLDING COMPANIES THAT SERVE NO PURPOSE BUT TO MOVE INCOME FROM THE MAIN BUSINESS TO THE SHELL AND BY HAVING MULTIPLE COMPANIES, THEY QUALIFY FOR ADDITIONAL TAX BREAKS.

STYLE SECTION!!!

Venturing beyond the Post's style section is an invitation to punishment.

If you do live in DC you've still got the National Enquirer and City Paper for a shot at what's really going on.

SS

I never understand this nonsense argument. NO ONE pays for their company or pays their eimployees or anything else in their business out of their personal bank account!

Personal income tax increases has NOTHING to do with "entrepenuers and their MYTHICAL job creation. All the create these days, in any case, is poor paying SERVICE jobs, NOT actual jobs with value. Then they skimp on paying anyone and everyone but themselves.

Tax the hell out of them.

دردشة

بنت جده