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The Corporate Income Tax Cut Is Unnecessary; Treat Corporations As Partnerships
Raymond Richman, 11/9/2017

Corporations are artificial entities and artificial entities bear none of the burden of income taxes; those who own them bear the burden of the income tax and gain from tax reductions. The burden of the corporate income tax is borne by the shareholders, and guess what? The top one percent of the richest Americans own forty percent of the stock of American corporations and the next nine percent own forty percent. The corporate income tax cut from 35% to 20% will reduce their burden 42%. That is why the U.S. stock markets have been booming since Trump’s election. But the purpose of income tax reform is not to make the rich richer; it is to lower taxes on the middle class and eliminate loopholes. So why are we giving the rich (and foreigners who own 15% of American corporate shares) such an enormous tax break?

The reasons given by its proponents is that the U.S. high rate causes American companies  to 1) invest in or move their headquarters and factories to lower tax countries, 2) cause U.S. multi-nationals to keep their foreign earnings abroad because to return them to the U.S. will subject them to the higher U.S. income tax rates, and 3) U.S. multi-nationals will use the high rates and low or non-existent American tariffs resulting from international trade agreements to produce their products abroad and to export them to the U.S. duty-free. These and many other evils of the corporate income tax can be corrected by a costless solution, namely, taxing corporate earnings under the personal income tax just as we tax partnership earnings. After all, the corporation is simply a limited liability company and most American partnerships and proprietorship have registered as limited liability companies (LLCs), and 4) stimulate economic growth. Under our proposal, the earnings of foreign subsidiaries would be subject to the personal income tax so there would be no incentive to keep earnings abroad. ...

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