Inconsistency of the Day

A thought occurred to me while I read this Wall Street Journal opinion piece that explains that taxes are high on American corporations. This is despite an earlier GOA report that showed a 12.6% effective tax rate.

It turns out there were two problems with that report. First, it had a small sample size. It was based on one year, 2010. That year saw heavy write-downs (i.e. tax deductions) from the financial crisis, so it was an anomaly. Second, it didn’t include taxes paid to foreign countries.

Another study, with a longer period or 2004 through 2010, showed the total tax rate exceeded 35%.

The thought that occurred to me was this: I wonder how those who tell us that ‘corporations are not people’ feel about corporate taxes. 

My guess is that they don’t want corporations to have a voice in the political arena, but they want to tax the heck out them, which I find inconsistent.

They should realize that corporations are made up of people. Shareholders and employees are people.

While I sort of agree that corporations in the political arena are usually out to use government’s power against us, I think the proper place to fix this is by reducing the power government has, rather than trying to keep the 16 year-old-girl away from the proverbial bad-boy.

I also think that the proper place to tax corporations is at the individual level. Taxing corporations just reduces the transparency of the taxes government is imposing on individuals.

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A source of our stagnation?

Does anyone disagree with what Rep. Ryan has to say in this video (HT: W.E. Heasley)?

 

46 seconds in Ryan nails it:

Every dollar that companies spend lobbying for a better tax deal, is a dollar they are not spending making a better product.

The graphic at 1:17 is telling.  The U.S. ranks second behind Japan in combined federal, state and local corporate tax rate of 39.2%.  Japan has been stagnant since the late 80s.

Most folks don’t understand that they pay corporate taxes.  They see that as a tax on the wealthy.

But, most of us own corporations through our retirement and investment accounts.  Here’s a simple way to estimate the amount of corporate taxes that are paid on your behalf each year.

Find the total value of your retirement and investment accounts.  Multiply that by 2% and 4%.  That’ll give you a rough ballpark low and high range of the corporate taxes that you pay.

So, someone with $250,000 in investments will pay between $5,000 and $10,000 in corporate taxes. This is a tax that most investors never realize they pay.

Add that to the income and payroll taxes that you pay directly (and are paid on your behalf by your employer) and you’ll get a better sense for how much total tax paid you paid.

A lower corporate tax rate will help everybody.

I’m a skeptic about most politicians, but I like what Ryan says here.