Return to Neptune, II: The Corporate Income Tax
While we’re on the subject of differential tax treatment, I don’t think Rod or his critics ever mentions the notorious double taxation imposed by the corporate income tax. This tax matters less than it used to, but the U.S. federal government still gets 15% of its revenue from it.
That’s about $375 B. Except for the year of the bail-out, it would be
very hard for all corporate welfare combined to approach this figure.
Of course, if I’m right about tax incidence, the main effect of the double taxation of corporate income isn’t that corporations suffer. The main effect, rather, is that we discourage corporations when they are more efficient than other forms of organization. This reduces productivity, which in turn hurts consumers.