August 14, 2008

An Invitation to Left-Right Harmony

Justin Katz

Presumably such rhetoric is the result of having stopped somewhat short of full consideration of circumstances, so pointing out additional considerations should bring us at least to the point of admitting that we individually lack sufficient information to justify either vitriol or broad policy changes. Here's the basis for the hasty jibe:

Unlike the rest of us, most U.S. corporations and foreign companies doing business in the United States pay no federal income tax, according to a new report from Congress.

The study by the Government Accountability Office released Tuesday said two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, and about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Oddly, the very same article offers the major reasons for adjustment of such statements:

An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.

"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.

The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.

In other words, one-third of corporations do pay corporate income tax, around 50% are structured such that their profits are taxed through the individual tax system, not the corporate, and some percentage of the remaining 17% had no profits. That's not even getting to the argument about whether tax credits are justified.

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In the end there really is no such thing as a corporate income tax, it's a "feel good" for 'progressives" to make them think that they're taking something from the man.

The end consumer ultimately pays the entire tax - the "corporate income tax" impact is that it's actually just a stealth sales tax, just that instead of being added on and itemized on top of the purchase price, it's included in the purchase price - with the retail sales tax charged upon it!

Posted by: Tom W at August 14, 2008 10:24 AM
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