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May 18, 2011

New Heresy: Abolish Corporate Income Taxes

Many people hate corporations. Progressives and populists blame them for a host of sins, and several libertarians assert they couldn’t exist in their present form without the State. We at DownsizeDC.org oppose the crony capitalism of the Corporatist State, and we cringe whenever people assume our pro-free market philosophy is a “defense” of corporations.

That is why our new campaign is a “heresy.” What we propose may shock you, but we have good reasons.

Our position is that even if you hate corporations . . .

Abolishing corporate income taxes is in your self-interest.

These taxes are unproductive as revenue-generators, but what they really do is make politicians more powerful, at your expense.

The following letter to Congress explains the benefits of abolishing the corporate income tax. The hard-wired message to Congress says . . .

Please repeal all corporate income taxes and replace them with nothing.

I then added these personal comments, which you may borrow from or copy. 

The facts are plain. At Reason, economist Veronique de Rugy explodes several myths about the corporate income tax. (http://reason.com/archives/2011/05/06/the-facts-about-the-corporate) She demonstrates that . . .

 * high corporate income taxes actually reduce employee wages.
 * federal revenues from this tax are lower than in other countries, even though we have the highest tax rate among industrialized nations.
 * corporate taxes fund a minuscule part of the federal budget.

On the other hand, if we scrapped corporate income taxes entirely . . .

 * foreign corporations would move here to take advantage of our ZERO corporate tax rate.
 * the ZERO tax rate would cause many new corporations to form that wouldn’t have been viable under the old tax system.
 * costs to comply with the corporate tax would disappear, leading to expanded investment.
 * the number of new jobs would soar, and wages would rise at the same time.
 * the resulting economic expansion would more than offset the “lost tax revenue.” This would also be a sustainable boom, unlike the booms caused by the Federal Reserve’s legalized counterfeiting.

This would be the ultimate economic stimulus. Nothing else could do so much so fast to boost the economy.

So why isn’t this done?

Because it’s against the interests of the Political Class.(http://en.wikipedia.org/wiki/Political_class)

Think about the typical political demagogue. Early in his speech, he promises to end “tax breaks” to corporations. Then, later in the speech, without any sense of irony, he says there should be “tax incentives” to encourage companies to do certain things.

Of course, the tax incentives he says he wants to create are exactly the same as the kind of tax breaks he says he wants to end, but the demagogue doesn’t want you to connect the dots.

So what he’s really saying is that he wants to end tax breaks to some corporations he doesn’t like (probably the ones that have received bad press) while extending tax breaks to other corporations who will do what he wants.

Politicians couldn’t care less how much revenue the corporate income tax generates. The revenue isn’t the point. The point is the complicated laws, breaks, and loopholes that the politicians can manipulate to enhance their own power and importance. 

Take the side of the people, NOT the Political Class. Abolishing corporate income taxes will reduce corporate influence in Congress, by removing a major incentive for lobbying. It will revive the economy almost instantly.

Abolish corporate income taxes now!

END LETTER

You can send your letter using DownsizeDC.org’s Educate the Powerful System.

And we encourage you to forward this to like-minded friends!

Jim Babka
President
DownsizeDC.org

If your comment is off-topic for this post, please email us at feedback@downsizedc.org

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