Tax reform is a priority agenda item in the 115th Congressional session. In the coming months, we will hear significant proposed changes to the extremely complex income tax laws. One of the hotly debated provisions will be what to do with the corporate tax rate. The current rate of 35% is the highest in the industrialized world. When you add the corporate amount charged by most states the total in near 40%. The average rate levied by other industrialized countries is about 23%. This is a huge disadvantage for American businesses in the global economy. It is driving American corporations and their profits offshore to avoid such a heavy tax burden.
The corporate tax rates currently being considered in Congressional committees and by the president range from 15 – 25%. Here’s my rate proposal – ZERO PERCENT. That’s right, get rid of corporate taxes. Here’s why: For the most part, the end results are that corporations don’t pay it. Only people pay taxes. The corporate tax functions in 3 different ways: 1) Shareholders pay taxes in the way of reduced profits or return on investment. This serves to discourage investing; 2) Workers pay the taxes in the form of lower wages and benefits, or there are fewer workers employed: and; 3) Consumers pay the taxes by paying higher prices for goods and services. Usually it’s a combination of all 3.
The only real beneficiaries of the corporate tax are politicians. It provides good demagogic political fodder to convince constituents those big greedy corporations are forced to pay their fair share of taxes.
An efficient and fair federal tax system is possible. But it’s not reform, it’s replacement. The best answer is to repeal the income tax (16th amendment) ridding the country from a corrupted and inefficient IRS and replace it with a simple and fair consumption tax called the FairTax (HR25/S18). There is overwhelming support for the FairTax by people who understand it. Unfortunately, the primary opponents are members of Congress and K Street lobbyist.
The FairTax plan is a sales tax proposal to replace the current U.S. income tax structure. It is a progressive national retail sales tax with a “prebate” to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement, and, through companion legislation, the repeal of the 16th Amendment. This nonpartisan legislation abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare and self-employment taxes and replaces them with one simple, visible, federal retail sales tax – administered primarily by existing state authorities. The IRS is disbanded and defunded. The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent and intelligent solution to the frustration and inequity of our current tax system
With the FairTax there is no April 15 tax filing deadline, no deductions from your paycheck, no record keeping, no tax preparation cost, no requirement to reveal personal information to government. FREEDOM is returned allowing you to make your own financial management decisions on when and how you spend your earnings.