We have been pretty upfront about our support for the abolition of the US corporate income tax code as a prime way to get our economy rejuvenated and going once again. We think that there are far more reasons to abolish it than to continue trying to 'make it right' which is what all of the polemics and commercials are all about every two years during election season.
Here's a 'rational man argument' for you to consider as you contemplate abolishing federal corporate income taxes: The cost of complying with and/or trying to avoid the bite of corporate taxes is more than the total amount of revenues the federal government collects each year.
And one alternative definition of insanity is this: 'When it costs more than what you get coming in, you just keep doing it because 'that is the way we have always done it!'
As part of our 'reality-based politics' series, let's take a look at the numbers as they are, and not as the talking heads or the politicos in Washington want you to believe in their dream of dreams:
In 2009, corporate tax revenues to the federal government totalled $135 billion. For 2010, they are expected to be only $185 billion.
Both of these represent around 1% of GDP; approximate the amounts collected from national excise taxes; and account for less than 7% of total revenues collected from all sources, including individual, payroll, excise and estate (death) taxes.
Even in the optimistic growth projections put out by CBO and OMB, the $307 billion in corporate taxes they expect to be collected in 2011 and $353 billion in 2012 would represent just under 2% of GDP.
Seriously, is it worth all of the political anger, angst and cost each year to collect less than 2% of GDP for the federal tax revenue coffers? We don't fight over federal tobacco or gasoline excise taxes the same way and they bring in comparable amounts of revenue. (see CBO Budget Projections)
The animus generated by some over the 'failure' of corporations to 'pay their fair share!' is almost laughable given the small percentage those collections actually play in modern American politics. If corporate taxes represented 10%; 20% or 50% of overall US tax revenues, then that would be a fight worth fighting about and spending a lot of money on both sides of the issue.
But less than 7%? Not really that important, is it?
Here are some of the numbers relating to the whole corporate law industry in America today. See if you think all of the expense and Sturm und Drang in the political theater is worth all the effort:
- $4 billion spent on direct lobbying in DC in 2008.
- $128 billion in accounting revenues, the majority of which is spent on filing corporate income taxes.
- $180 billion in legal fee revenues, of which 45% is estimated to be related to corporate law work by outside private firms
- This does not count all of the hundreds of thousands of in-house corporate lawyers at corporations which could amount to a comparable amount to the $180 billion figure above or more
Right there, we are looking at close to $300 billion spent each year on a process that will produce only $185 billion in corporate tax revenues for the federal government in 2011, maybe.
Now some naysayers would say: "What about all the corporate tax lawyers/accountants/specialists and the poor corporate tax lobbyists and PACs in Washington? Wouldn't they be thrown out of work if we abolished the corporate tax code in American tomorrow?'
Isn't that the same argument as a defense subcommittee chairman saying he wants muzzle-loading muskets to be made in his district regardless of whether DOD wants them anymore to fight modern wars?
We think American productivity and economic growth would explode if corporate taxes were repealed tomorrow by the new Congress. We think all of these highly-educated and motivated former corporate tax people would find new work by the truckload in such a positive scenario. They might even start their own new manufacturing business.
Aside from the accounting, legal and lobbying profession having to readjust to the new reality, wouldn't the end result be far more productive for America over the rest of the 21st century than wasting all this time and effort on attacking/protecting certain provisions of the US corporate tax code?
Mr. Boehner and the New GOP in the US House of Representatives....here's your chance to prove the American private sector and capitalism works by abolishing the corporate income tax code.
It will help all of us.
courtesy of blog.craftzine.com