Are you an average American? Percentage-wise, you pay more income tax than ExxonMobil does.
Oh come on Mike. That’s a totally meaningless comparison! There is no reason at all to think that the corporate tax rate of an oil company should relate in any way to the average american.
Corporate taxes are a bizzarre construct in the first place. They’re still taxes on people just in a convoluted, distortion inducing way. Why do we even have them?
I can’t believe you made me trade my ipad for my laptop just to reply to this. But you did. Not really your fault, I just couldn’t let this go.
The argument against corporate taxation is that corporations are simply artificial constructs that allow a group of people to legally bind themselves together for the purposes of accomplishing a goal. Ultimately corporations are nothing more than collections of people, and those people make money, and the people’s money that come from the corporations is taxed… ergo taxing the corporation means that the money is being taxed twice and taxing anything twice is evil.
There are many problems with this argument. First: corporations are theoretically people. The Supreme Court has upheld this concept, particularly as it relates to corporate speech. So of course taxes on corporations are taxes on people. Corporations are people!
Second: Corporations make money, they save money, they spend money, they invest money. Corporate economic activity has, as I’m sure you can imagine, a massive impact on the American economy. Said another way: what American businesses decide to do with their money has massive implications for “the rest of us ordinary folk.” And taxes are policy tools. They have been for generations now. We use the tax code to incentivize certain economic activities and punish others. This is why we tax capital gains and ordinary income differently. The government has an overwhelming interest in influencing whether American companies hoard money, disperse money to shareholders, disperse money to employees, hire more employees, buy inventory, lay off workers, close factories, open factories, et cetera. Tax policy is one of the only tools we have to influence positive economic activity on the part of corporations. Without these tools there is a simple tragedy of the commons: corporations are always obligated to create shareholder value; they are not obligated or even incented to create common value… it is through tools like tax policy that we can influence them to save money when that’s beneficial to the commons or hire more people when that’s beneficial. Or invest in new technologies (say: clean energy or electric cars) that would otherwise be too expensive but that are essential for America’s long-term competitiveness.
Third: all money is taxed twice. Actually, all money is taxed an infinite number of times. If I give you a thousand dollars you have to pay tax on that money as income. Then, when you use that thousand dollars to buy a brand new iPad 2 you have to pay sales tax on it. Then when Apple books that money as income it has to pay taxes on it. Then when it disburses the money to its employees in the form of salary both Apple and the employees have to pay taxes on it. Then when those employees spend the money… you get the idea.
So the “taxes on corporations are bizarre because they’re double taxation” argument is bullshit because all money is taxed all the time through a theoretically infinite number of iterations.
Fourth: American corporations benefit tremendously from American infrastructure. That infrastructure is paid for by tax dollars. The wealth created by that infrastructure should be taxed at the point closest to its creation, which is the corporation. This is infinitely more efficient than taxing the employees and shareholders who more indirectly benefit from this infrastructure.
Fifth: We have a consumer economy. Taxing corporations is better policy than taxing low or lower income individuals. Corporate income tax (the type I imagine you object to most, although there are of course others) is on net income. Personal income tax is on gross or adjusted gross income. Corporations only pay tax when they are profitable. People pay taxes even when they are struggling. Taxing a struggling person has meaningful negative social impact (i.e. it depresses the economy and causes second-order problems that may cost more money in the long run than the taxes bring in). Taxing a profitable corporation has little negative social or economic cost, if any, as long as there’s still plenty of money left over to distribute to employees in the form of salaries and benefits (there is, the company’s profitable or it’s not paying taxes) and to distribute to shareholders in the form of increased share prices and/or dividends (there is, Exxon’s market cap is four hundred billion dollars). Exxon and its shareholders can afford to pay a bit more tax without damaging anyone’s interests. Really.
I’m pretty sure I could go on but I want to get back to my iPad. Also: when are we getting that beer?
Oh yes, beer. TJs Friday after work?
PS: also that graph makes use of the very evil Y axis other than 0 trick. Making it intellectually dishonest right from the start.