Repealing the Corporate Income Tax

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 by Donald Trump, who said "All politicians do is talk"!

Not one politician on the stage 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, merely a band aid, not the required surgery as the corporate tax remains an “anchor” preventing businesses from seriously 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. Congress and bureaucrats

look at projected, non-quantitative assumptions rather than opportunities to bring 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 to 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 an asset.  The repeal also saves the $20-30 billion cost of compliance, businesses must bare, bringing the amount available to almost $400 billion. 
Lastly, an issue never 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 staying in business or meeting their payrolls, providing
them a much needed shot in arm for states, especially ones whose economies 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.
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 c
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 most 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 changing 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".