I have been wondering for a while now, whether there exists a real win/win possibility with regard to corporate tax rates, and I would like to pose this question to the dkos community. Here are the broad strokes:
Since the corporations that underpay their taxes are mostly large, multinational, and in many cases the recipients of extensive amounts of government monies, whereas the corporations that actually have to pay the (admittedly large) 35% tend to be small and at a competitive disadvantage, I propose a win/win means to level the playing field:
1) a Step Ladder corporate tax rate with three steps: 10%, 17.5%, 20%. This would work just like a progressive income tax, but only the smallest and least profitable companies would qualify for the ultralow 10% rate - thus helping young companies thrive!
2) Instead of trying to close all loopholes, which seems to be a game the rich always win, simply write into the law that until companies meet the thresholds laid out above:
- it is illegal to spend ANY money on lobbying, or on "educational campaigns", even indirectly. Violation automatically results in a flat 30% tax rate not subject to deductions.
- it is illegal to receive government monies (Federal, State, and Local), including LOANS. Violations have the same effect as above.
Here is what I like about this idea:
- it creates a very real cost to those companies that will inevitably find a way not to pay taxes. It basically applies the social equation to them: if you don't pay your taxes, don't expect ANYTHING from society. I think once a few companies gamble and lose, this will quickly result in a broad consensus that paying taxes is in one's interest.
- it reverses the current bias in favor of big successful companies, instead favoring small, startup companies. The 10% rate should apply to all corporations with a ratio of income per US worker employed at 300% poverty level of <$1K. This has several bonuses - it encourages companies to invest in US workforce, AND encourages them to pay decent wages.
- it sets up a pretty clear dichotomy between money spent on lobbying, and money spent on society. If several million dollars spent on lobbying are "no big deal" if they lead to procurement of government monies, then the same logic ought to apply to taxes. Furthermore, its absurd and frankly laughable that a corporation should ever be both a taxdoger and a recipient of public funds. Lets make those options mutually exclusive, and then see which choice the "Free Markets" make.
- It would increase the taxes paid by large corporations, and probably come up slightly revenue positive. But, this would be borne by exactly the right entities, who have thusfar been taking gross advantage of the system.
- It reduces "red tape", which I have to agree is really annoying, and further disadvantages small and new companies. Simple rules tend to be more popular with the public, and more efficient. This is the sort of bill that could be written in 10 pages or less.
- Its a terribly easy sell, because it is designed to favor "small businesses". It is also designed to lower the corporate tax rate of MOST corporations, without passing the bill to taxpayers. Furthermore, it takes a whack at taxdoger lobbyists, which is just a really easy group to vilify in public and in the media, and RIGHTFULLY SO. Last, it implicitly reminds everyone of the social contract, that government help is possible only when you support your own government. Its an ideologically progressive proposal.
what do people think?