Top 60 Oracle Blogs

Recent comments

Why we should eliminate corporate INCOME taxes.

Another message from “Farnham for US Senate”

Lately, there has been a lot of news about “corporate inversion.” Essentially a large US based corporation essentially buys a foreign company based in a country with lower corporate income tax rates, but designates that the acquisition is now actually the top of the corporate structure. With this stroke of paperwork (producing nothing), the net income after taxes is improved for the stockholders. Aside from the public relations (which might be costly, especially in consumer products), this is what management should do: Maximize the returns to stockholders.

This is just a new wrinkle in the idiocy and waste that is taxing corporations on income.

Since customers pay corporate income taxes anyway, how about we take away the corporate incentive to lobby to complicate the tax code by eliminating the corporate income tax altogether. Now of course they should pay fees for services, such as property tax to pay for police and fire coverage and taxes on gasoline an diesel fuel to build roads and mass transit. But all manner of evil and waste are eliminated at no necessary revenue decrease by ending corporate income taxes. So what happens? Well, first off, the first country to eliminate the corporate income tax wins. (New Hampshire, with no personal income tax, might become a corporate headquarters darling, but that is parochial.) Now, instead of “inversion” acquisitions, companies will race to bring their headquarters and highest paid executives to the US. Sweet. They also will only need one set of books, so “tax accounting” and all the associated distortions and unproductive waste (that currently is very beneficial to the bottom line without producing anything) goes “poof.” Companies will save a (Burger) King’s ransom by not having to do all manner of accounting adjustments to minimize tax. Operations and cost accounting will drive corporate behavior and they will be out of the income tax credit business.

Prices will drop. Profits and dividends will rise. Individuals will get increased income from investments and they will pay tax on that. Everyone wins except the lobbyists and legislators who lobbyists pamper and fund to win favor.

Ending corporate income tax eliminates waste and improper influence by economic force.