Kevin Williamson has examined the presidential candidates’ proposals for corporate taxation. Unimpressed, Williamson shares his own ideas with National Review Online readers.
… [A] truly far-seeing candidate wouldn’t stop at keeping U.S. firms out of overseas tax havens. The wiser approach is to be the tax haven.
Which is why the United States should have a corporate income tax rate of 0.00 percent.
That isn’t as radical as it sounds. The corporate tax is in many instances simply a tax that sits on top of other taxes paid by corporate shareholders. For instance, corporations are taxed on their income, and they can pay what’s left over to shareholders through dividends, which are then taxed, too. The much more sensible approach would be to tax all income — once — at the same rate, regardless of source, after it hits somebody’s bank account.
There are a limited number of things a corporation can do with its earnings, all of which could be addressed through the individual income tax. As noted above, a corporation can pay out earnings in dividends, which could (and should) be taxed the same way ordinary income is. It can blow all the money on bonuses for its executives, who would then pay ordinary income taxes on it. It can reinvest earnings in the business, making it bigger and more profitable — which ultimately means either wages, bonuses, dividends, or other capital gains, which should be treated as ordinary individual income and taxed in the same way.
