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.
We take fewer mental pictures per second.
- Recent memories run in our brains like sped-up old movies.
- In childhood, we capture images in our memory much more quickly.
- The complexities of grownup neural pathways are no match for the direct routes of young brains.
Both panoramic and detailed, this infographic manages to show both the size and distribution of world religions.
- At a glance, this map shows both the size and distribution of world religions.
- See how religions mix at both national and regional level.
- There's one country in the Americas without a Christian majority – which?
Melting ice is turning up bodies on Mt. Everest. This isn't as shocking as you'd think.
- Mt. Everest is the final resting place of about 200 climbers who never made it down.
- Recent glacial melting, caused by global warming, has made many of the bodies previously hidden by ice and snow visible again.
- While many bodies are quite visible and well known, others are renowned for being lost for decades.
The bodies that remain in view are often used as waypoints for the living. Some of them are well-known markers that have earned nicknames.
For instance, the image above is of "Green Boots," the unidentified corpse named for its neon footwear. Widely believed to be the body of Tsewang Paljor, the remains are well known as a guide point for passing mountaineers. Perhaps it is too well known, as the climber David Sharp died next to Green Boots while dozens of people walked past him- many presuming he was the famous corpse.
A large area below the summit has earned the discordant nickname "rainbow valley" for being filled with the bright and colorfully dressed corpses of maintainers who never made it back down. The sight of a frozen hand or foot sticking out of the snow is so common that Tshering Pandey Bhote, vice president of Nepal National Mountain Guides Association claimed: "most climbers are mentally prepared to come across such a sight."
Other bodies are famous for not having been found yet. Sandy Irvine, the partner of George Mallory, may have been one of the first two people to reach the summit of Everest a full thirty years before Edmund Hillary and Tenzing Norgay did it. Since they never made it back down, nobody knows just how close to the top they made it.
Mallory's frozen body was found by chance in the nineties without the Kodak cameras he brought up to record the climb with. It has been speculated that Irvine might have them and Kodak says they could still develop the film if the cameras turn up. Circumstantial evidence suggests that they died on the way back down from the summit, Mallory had his goggles off and a photo of his wife he said he'd put at the peak wasn't in his coat. If Irving is found with that camera, history books might need rewriting.
As Everest's glaciers melt its morbid history comes into clearer view. Will the melting cause old bodies to become new landmarks? Will Sandy Irvine be found? Only time will tell.
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