It's Time to Abolish the Corporate Income Tax
Daniel Altman is Big Think's Chief Economist and an adjunct faculty member at New York University's Stern School of Business. Daniel wrote economic commentary for The Economist, The New York Times, and The International Herald Tribune before founding North Yard Economics, a non-profit consulting firm serving developing countries, in 2008. In between, he served as an economic advisor in the British government and wrote four books, most recently Outrageous Fortunes: The Twelve Surprising Trends That Will Reshape the Global Economy.
Daniel Altman: The United States has one of the most complex tax systems in the world. It takes hours and hours to fill out the return for most people. Especially if you want to claim any deductions or if you have more than one source of income, you got to file your state taxes separately. Maybe even local taxes depending on where you live. It's a nightmare.
There's no doubt we can do a lot to simplify our tax system. But we could also do a lot of other things to change it too. And the fact is we haven't really made a major change in out tax system for about a hundred years. It's been a hundred years since we got a constitutional amendment just so we can have an income tax. Now maybe it's time to consider how we would refit our tax system for the 21st century.
One thing we could do is get rid of the corporate income tax. That's right, the tax on corporate profits. Why? It's a terrible tax. Economists to this day don't know who pays it. Is it the people who own shares in companies? Is it employees of companies? Is it consumers who buy the products from companies? We don't know. It could be a mix of all of them. And that means that we really don't know who's bearing the burden.
Another problem with the corporate income tax is it's extremely volatile. Unlike your household where you pay taxes no matter what. Whether or not you spent all your income or not. When a company spends all its income, it has no profits and it doesn't pay any corporate income tax. So that means the corporate income tax revenue is really volatile.
In years when the economy is doing great we collect a lot of corporate income tax revenue. When it's doing badly we collect much less. And that means it's much harder for the government to plan. It's much harder for us to make sure that we get a steady stream of revenue from year to year and we don't have to cut back on spending during a down turn.
So what could we do to replace it? Well one idea would be to change our income tax into a sort of hybrid income and wealth tax. So we would still be taxing some of the owners of capital in this country and not just people who own labor and supply that into the work force. How would it work? Well, we would have a sliding scale where, depending on your wealth, you would pay different rates of income tax. If you didn't have any income coming off your wealth then you wouldn't pay any tax. But the more wealth you had, the higher tax rate you'd be liable to pay.
The great thing about this is if you hold income constant, then you're always facing the same marginal tax rate, that's tax rate on the next dollar of your wealth. If you hold wealth constant it's always the same marginal tax rate on your income. So that distortions on the behavior that we might have and where we invest and how we work are minimized.
Now is this too crazy an idea to be implemented in the 21st century? Some people might even say it's unconstitutional. But it's at least worth thinking about it because we've done so little to change the fundamentals of our tax system for a century. All we've been doing is messing with these little details that just add more lines to the tax form. Lets do something major and clean it up for the next century.
Jonathan Fowler & Elizabeth Rodd
The tax on corporate profits is a terrible tax. Economists to this day don't know who pays it. And that means that we really don't know who's bearing the burden.
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Civil discourse has fallen to an all time low.
The question that the American populace needs to ask itself now is: how do we fix it?
Discursive fundamentals need to be taught to preserve free expression
In their findings the authors state:
upholding First Amendment ideals.
Talking politics at Thanksgiving dinner
- Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
- Traditional Liberals: older, retired, open to compromise, rational, cautious.
- Passive Liberals: unhappy, insecure, distrustful, disillusioned.
- Politically Disengaged: young, low income, distrustful, detached, patriotic, conspiratorial
- Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
- Traditional Conservatives: religious, middle class, patriotic, moralistic.
- Devoted Conservatives: white, retired, highly engaged, uncompromising,
It's interesting to note the authors found that:
"Tribe membership shows strong reliability in predicting views across different political topics."
Here are some statistics on differing viewpoints according to political party:
- 51% of staunch liberals say it's "morally acceptable" to punch Nazis.
- 53% of Republicans favor stripping U.S. citizenship from people who burn the American flag.
- 65% of Republicans say NFL players should be fired if they refuse to stand for the anthem.
- 58% of Democrats say employers should punish employees for offensive Facebook posts.
- 47% of Republicans favor bans on building new mosques.
Here are some guidelines for civic discourse that might come in handy:
- Practice inclusion and listen to who you're speaking to.
Civic discourse in the divisive age
dangerously tribal, fueled by a culture of outrage and taking offense. For the combatants,
the other side can no longer be tolerated, and no price is too high to defeat them.
These tensions are poisoning personal relationships, consuming our politics and
putting our democracy in peril.
Once a country has become tribalized, debates about contested issues from
immigration and trade to economic management, climate change and national security,
become shaped by larger tribal identities. Policy debate gives way to tribal conflicts.
Polarization and tribalism are self-reinforcing and will likely continue to accelerate.
The work of rebuilding our fragmented society needs to start now. It extends from
re-connecting people across the lines of division in local communities all the way to
building a renewed sense of national identity: a bigger story of us."
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