The Biden administration may be realizing that a corporate minimum tax is inconsistent with the multitudinous tax preferences that Leviathan himself gives corporations in order that they do what he wants them to do. Here is another idea to finance the $2.3 billion of proposed “infrastructure” or whatever pleases Leviathan: tax rocks instead.
The proposal is succinctly explained in my article “Joe Biden’s Economic Agenda: An Early Appraisal,” in the Spring issue of Regulation:
However, corporations don’t pay taxes any more than, say, rocks do: if the government were to tax rocks, the actual incidence of the tax would fall on some flesh‐and‐blood individuals. In the case of corporations, those individuals are some combination of shareholders, employees, and consumers.
If it is feared that people would just get rid of all the rocks they possess, there is a large number of other, more sticky, candidates for a tax that would not officially target individuals. The government could tax pets, cars, bees, marriage contracts, or churches. In the latter case, perhaps God will pay? Another idea: tax pension funds and 401k’s that hold corporate stocks. (An estimate puts at 30% the proportion of American corporations’ stocks that are owned by American households’ retirement accounts.)
READER COMMENTS
Juan Manuel Perez Porrua
Apr 9 2021 at 10:30am
I would say that taxing churches, especially taxing multi-million dollar a year evangelical ministries, private religious schools, and ithers, is a great idea.
Perhaps the IRS can begin by demanding that the Catholic Church return the ~$1.5 billion subsidy it received last year.
Pierre Lemieux
Apr 9 2021 at 11:27am
Juan: Here is what AP News says:
A story inspired by an illustration in Nozick’s Anarchy, State, and Utopia (if my memory serves): Suppose somebody walks around throwing books through open house windows. If you don’t agree with that (say, because you don’t like the books), will you blame the people who received the books or the guy who gave them?
Juan Manuel Perez Porrua
Apr 9 2021 at 12:17pm
Someone may be throwing books away, but whose books are they? Were those subsidies legal? I’d think that the separation of church and state would prohibit the government from such a brazen transfer of funds to religious institutions: any of them, even if it’s all of them.
However, that is a legal question that has nothing to do with the material question: taxing churches and religious institutions. Religions and their employess make a lot of money, honestly or dishonestly, and they would be a good source of revenue.
God doesn’t need to pay as long as Saint Peter does.
Alan Goldhammer
Apr 9 2021 at 2:18pm
The holdings are taxed when they are withdrawn unless they are in a Roth IRA in which case the money used to invest in the IRA is taxed up front.
J Mann
Apr 9 2021 at 2:29pm
Mankiw’s height tax is always worth reviewing.
https://www.nber.org/papers/w14976
Pierre Lemieux
Apr 9 2021 at 10:08pm
J. Mann: Thanks for the link. I had never read this interesting article by Mankiw and Weinzierl. It does strongly suggest that most people, in reality, reject the utilitarian justification for redistribution. There are also strong economic-methodological reasons for this rejection. Anthony de Jasay wrote in The State:
Craig
Apr 9 2021 at 5:02pm
Of course I would actually suggest corporate taxation should be completely eliminated.
“The Biden administration may be realizing that a corporate minimum tax is inconsistent with the multitudinous tax preferences that Leviathan himself gives corporations in order that they do what he wants them to do.”
Well that is part of the reason Amazon has paid little tax of late in more profitable times. TJCA allowed them to fully expense many investments.
There is still a problem and that is LTCG and qualified dividends are taxed at preferential rates on the presumption that the money was taxed once at the corporate level. The irony is that there are a fair number of bizarre companies like Amazon, Tesla, Uber, etc which are extremely valuable, but which aren’t particularly profitable and the result is that the founders of these companies can sell stock, take a LTCG even though the underlying corporation has never paid so much as a cent in income taxes.
Pierre Lemieux
Apr 9 2021 at 9:23pm
Craig: The rational solution would indeed be to eliminate the corporate income tax, as you suggest. Otherwise, the system gets into absurdities and problems impossible to solve in a satisfactory manner.
Matthias
Apr 10 2021 at 6:11am
Your article sounds like a tongue in cheek argument for Land value taxes.
You can get rid of rocks, but collectively people can’t get rid of land.
Thomas Lee Hutcheson
Apr 10 2021 at 7:46am
Impute business income to tax-filing owners and tax the profits imputed to non0tax-filers at the maximum personal rate. If this reduces collections, raise the personal rates.
Thomas Lee Hutcheson
Apr 10 2021 at 5:46pm
Taxing “corporate” profits is still useful way to tax the incomes of foreign share holders (individuals who do not pay US personal income taxes). US shareholders can have income and tax paid imputed. Capital gains (adjusted for inflation) should be taxed as ordinary income with tax averaging allowed over the holding period.
Bill
Apr 11 2021 at 11:40am
Related to the question of corporate income tax incidence — labor is estimated to bear a sizable part of the burden (>50% ?) Of the portion borne by stockholders, the estimates at your link inside the parentheses of your last paragraph provide some indication of how that burden might be shared.
Floccina
Apr 12 2021 at 12:15pm
The corporate tax looks to me like a way to hide taxes, nothing more, although it might have the effect of discouraging incorporating verses partnerships and sole proprietorship, of course there are also S-Corps and LLC’s.
Comments are closed.