It’s a significant part of the claim in this thread. That the highest 1% pay twice as much of an effective as the average taxpayer … which they do only claim they have personally paid those taxes paid by corporations that give them income. Barring that it is pretty flat, and very flat from a historical perspective. The top 1% pay only 3% higher of an effective rate than do the average tax payers.
Which is the fair number to consider?
My first impression is that they should not be counted. I’d be willing to listen to an argument in favor of it, depending on the context. If it’s a useful measure of economic output (something like GDP) and calculated consistently, I could be persuaded that it’s a useful statistic.
In general, I would hold to the following standards:
Whenever such numbers are cited, the basis for the calculation must be explicitly stated.
In must be applied consistently. It seems that corporations are distinct entities when it comes to limits on political contributions. They’re distinct when people argue against “double taxation” (taxing a corporation as an entity, then taxing the people who receive dividends). But when someone wants to make it look like the top 1% are paying a lot in taxes (as a means of arguing against taxing them more), the corporation is treated as an extension of its shareholders, who claim the company’s tax liability as their own. It’s not fair to try to have it both ways.
An S Corporation passes corporate income/loss onto the owners/shareholders. Corporate income is is reported on the personal tax forms of the shareholders. People seem to understand and be ok with this. I would say the shareholders quite reasonably state that they are paying tax on such a corporation’s income.
But in a C corporation the business files its own tax forms and pays taxes on any income. Then the shareholder also pays tax on income from dividends. Some argue vociferously that the shareholder, as owner of the company, is not paying the tax. Others say clearly the shareholder would be able to receive a higher dividend if the corporation did not pay taxes directly and thus the shareholder indirectly pays the corporate tax.
Why does it depend upon the type of corporation? The owner pays in my mind. Whether that comes out of an account labelled corporate or an account labelled personal is little difference - it is an accounting convention. If all corporate income was treated on the pass through basis like in an S corporation then I think tax compliance could be simplified.
I agree, but the same logic could be made about the employee of that corporation. He would be getting a higher salary if the corporation wasn’t paying the tax. But the CBO isn’t counting them - and it makes no sense why to me.
IMHO - it shouldn’t count.
What about the businesses that business does with? They would have made more money - if the businesses they worked with didn’t have to pay tax. Why stop at one level?
Excise/sales taxes, property tax, payroll, whatever you actually pay to the gov’t - or is deducted for you - should count. Some of it probably is borderline.
Note that state and sales tax is left out - those are taxes too - when included - things are a lot less progressive:
http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america.php
More likely the customer … a tax is a business expense and raises the cost of the product or service. The argument made in favor of lowering corporate taxes is not to lower the taxes further for the wealthy, who are already not taxed so progressively, but that such would lower prices and allow more corporate investment.
Really it is the customers who should be given credit for paying corporate taxes. No different than a sales tax.