Repealing the Corporate Income Tax

Why doesn't the US tax code ever get simplified, less onerous or cut from its
80,000 pages after decades of politicians offering their own version of how it
could be done?

To learn the answer look no further than a bold comment made at the first
Republican presidential debate when Donald Trump, "All politicians do is talk"!

Not one politician attempted to refute what Trump said, nor could they!

This election year Trump and the other candidates offered their own versions
to replace the current complex and convoluted tax code with one that is simpler,
fairer and stimulates economic growth.

But, we find one constant in most proposals, retention of the corporate income
tax, although at a lower rate, little more than a band aid, not the required surgery
as corporate tax remains an “anchor” preventing businesses from competing
against foreign companies whose tax rates are much lower!

One thing I did learn, when it comes to complex issues govt. approach them
differently than the private sector does where business survival hangs in the
balance.

In govt. politicians are guided by fear, not potential. They look at projected,
non-quantitative assumptions rather than opportunities of economic growth.

Why focus on the corporate tax?

Its long been said corporations don't pay taxes, people do, in added costs on
product and services. If this is true than businesses never really pay taxes,
their customers do.

The US corporate tax is not only one of the highest, its breeds corruption,
and the primary reason businesses and organizations have offices in Washington,
close to politicians and federal regulators they cajole for favors that benefit their
interests, not the American people or the country!

Abolishing the corporate tax moves us closer to what we deserve, an honest
tax system to fund the govt., without doling favors for influence peddlers at
the expense of individual taxpayers.

Now, to the math, the cost of repealing the corporate income tax.

In 2015 businesses paid $340 billion or 11% of total collected, an amount not
much more than what is paid to Japan, Great Britain and China each year in
interest payments on our exploding debt!

Retaining this money shifts it on companies' balance sheets from an expense
to a an asset. Repeal also saves the $20-30 billion cost of compliance businesses
must bare, bringing the amount available to almost $400 billion.

Lastly, an issue yet to be resolved, the $2 trillion of untaxed foreign earnings
of US companies sitting in overseas accounts for years that politicians 'talk'
about repatriating so businesses can invest here rather than leave money parked
in foreign banks. This money would come "home" once the corporate income tax
is repealed!

This infusion of  repatriated money will enable businesses to expand, invest
in new facilities, equipment and  hire more employees. It especially helps
struggling companies that at times have difficulty meeting their payrolls or
staying in business, providing them a much needed shot in arm for states,
especially those whose economies are still mired since the recession ended.

Additionally, the projected $340 billion 'lose' to the treasury would be offset
by the 'gain' if Congress ends many subsidies the govt. pays out each year to
businesses. No need for subsidies when there is no longer a tax liability of
$340 billion.

From 2008 to 2010, subsidies totaling $222 billion were paid out with more
than half going to the top 25 companies. On average the treasury would save
$110 billion annually. You can add to this the $100 billion cost of federal
regulations which should be addressed.

http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf

Repeal of the corporate tax will also bring foreign investments here. We
would see an 'immigration' all Americans would welcome, international
companies establishing domestic headquarters without the tax burden,
bringing new job growth with them and provide the same benefits domestic
companies receive.

The repeal of the corporate tax would benefit the IRS directly by simplifying
the tax code and redirect its resources from administering business compliance
to reducing the billions lost on tax evasion. The IRS can begin to eliminate
 thousands of the 80,000 pages of its code written for corporations and also
redirect its enormous staff of corporate auditors to individual tax auditing
where billions of revenue is lost due to tax evasion, rarely reported.

Currently, the IRS assigns its auditors to oversee the corporate revenue stream
 of 10%, not the larger provider of revenue, individual taxpayers, who pay 60%,
 which is the biggest source of evaded taxes, more than $300 billion annually.

Another "ripple effect" would be the transformation of the non-profit 'industry'
with its two million qualified organizations. Without the corporate income tax
non-profit structuring loses its primary appeal and the reason major non-profits
have offices in Washington, to lobby politicians. This should lead the IRS to
reevaluate the need to provide non-profits with tax credits.

Non-profits, created to provide tax relief for worthy endeavors, morphed into
multi-million dollar enterprises using the advantage of tax exempt status to run
businesses and influence legislation, beyond any boundaries of "worthy endeavors"
which includes filling their coffers.

Congress would also benefit by no longer needing oversight on corporate taxation
or the 'politicking' which drives decisions and donations. A member of Congress
is more likely to answer a call from a powerful non-profit than his constituents.

People may not think eliminating the corporate tax is enough to stimulate the
economy and create more better paying jobs, but this single tax has greater
implications than most other choices such as lowering or ending taxes on low
income earners, increasing the minimum wage or raising taxes on the rich.

One thing tax experts fail to factor is that any changing of the tax code releases
the power of human behavior. Ending the corporate tax will demonstrate how
powerful it is.

If Congress is serious about tax reform it can start with a first bold step, as bold
as Trump was, by reminding us "All politicians do is talk".

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"Point of View" blog http://ajbruno14.blogspot.com/