This is a faith based argument. The empirical evidence suggests otherwise. For a review of task policy, I would recommend the work of Joel Slemrod. The greatest effect of changes in tax rates is on tax planning and timing. The smallest effect is on actual behaviors, such as work-hours or purchases of capital equipment.
He pays a lower share of his income in taxes than his secretary does. His income is higher, so his absolute level of taxes is higher. So what?
I note that you did not address the carried interest loophole, whereby hedge fund managers pay a lower rate than entrepreneurs with the same income.
Incidentally, here’s a chart of investment in plant and software since 1994. It actually recovered nicely in 2010. The problem in this recession has been a collapse in the residential market. CEO’s chase opportunities; the effects of tax rates in practice are small to nonexistent. Fraud in the residential housing market, comatose regulation and excessive leverage, OTOH can lead to financial collapse, as we observed in 2007-08. Business Investment in Equipment and Software Is Doing Fine...
That is entirely as it should be. Income should be taxed when ever it is transferred. Pretending it is some kind of special circumstance for the investor class is the most transparent double-speak.
They are different entities- corporations are people, remember? The corporations get taxed on the money they make. Then the investors, who didn’t make any of that money previously taxed, get taxed on the money they make. Is it that difficult?
So, Mitt came out in support of Gov. Scott Walker this past weekend. Not a big surprise, I guess. Supporting an anti-union, pro-business governor – who woulda thunk Romney would do that? But is this more evidence for Romney not being in touch with the common man? What’s the fallout for Romney if Walker loses the recall? (And I have no idea what the likely outcome is right now.)
You are conveniently ignoring an obvious difference between a corporation paying a dividend and other types of transfers that create income: there’s no new economic activity in the dividend case. If a corporation pays money to an employee or to buy raw materials, then it is doing so on account of the economic activity between the two parties (and the corporation gets a deduction for that). But when the corporation pays money to a shareholder, it’s just giving the results of the corporaiton’s economic activity to its owners.
Here’s another way to look at it: if a person owns a business through a partnership, then there’s only one level of tax (at the partner level). If a person owns a business through a corporation, there’s two levels of tax (at the corporation and shareholder level).
So, it makes perfect sense to take into account the corporate tax rate when considering how much tax is paid with respect to a dividend or capital gain on the sale of stock. (Now, exactly how to do that is another matter entirely, but the point for present purposes is that completely ignoring the tax at the corporate level is clearly the wrong approach.)
As a matter of policy, we should take into account all measured consequences of any given instrument. That includes the effects of the corporate tax rate on savings and investment. There’s nothing special about double taxation: the value added tax is based upon multi-level taxation for example.
Big however. I have yet to see a empirical treatment that convincingly parcels out the burden of the corporate tax on various stakeholders. I’m not even sure how to apply a null prior: how many stakeholders are there? Do we include labor, top executives, suppliers, shareholders and consumers? That would make five, which implies that we would apply 20% of the corporate tax to shareholders, which doesn’t sound like a large enhancement. Now that’s a true WAG, but if you know of something better please cite.
It sounds like you’re saying that taxing dividends (indirectly) has no behavioral effects. If this is the case (big if, I know) then it would be an ideal tax. I gather that you are actually making a mere legal distinction though: consider this a way of pointing us in the direction of the actual policy issues.
Well, I could get very little meaning out of your post M for M. But the part I did understand was your questions about measuring who bears the burden of the corporate tax (the technical terminology often used is determining the “incidence” of the corporate tax). There are reams of papers written on this subject.
Nothing is anything in general and in the abstract. Something is something only for certain purposes.
There’s no general abstract objective definition of “a person” that applies in all space and time for all purposes. But there are some aspects of life in which a corporation is a “person” right alongside actual natural persons.
One example of corporate personhood is the ability to sue and be sued in one’s own name–I can do that, you can do that, and a corporation can do that.
One example of corporate non-personhood is the ability to get married or adopt a kid–a corporation can’t do either of those.
I’ve never understand when some liberals get all bent out of shape over corporate personhood. It’s a fairly mundane concept, really.
How is it not economic activity when the corporate person transfers money to the owner persons? It’s not something that must necessarily happen, after all: The corporation could use that money to buy more infrastructure instead, for instance.
I don’t understand why Romney would even bother with an attack like that. Who is it supposed to convince, and what are they supposed to believe? How are his own college degrees supposed to stay a secret? Santorum can sell nonsense like this because he either believes it or people can believe he doesn’t know any better. Romney can’t get away with that kind of thing.