Corporate Tax Should be Lowered

Dismissing something easily says more about the one dismissing than about what's being dismissed. It seems that you didn't even read the objection but instead had a prefabricated response ready. I'm here to learn about the arguments surrounding these important policy issues. From your response to the objection, it seems that you're here to do something else. And that's okay of course, but let's actually try to start the debate. First, there is the empirical aspect of it, which requires calculations and some guesswork about what corporations might or might not do given a change in the tax code. Second, it necessarily involves interrogating the meaning of a corporation, since we are referring them to discrete revenue and expenditure categories that are different from private citizens and non-profit organizations. You are wrong to say that I am arguing "political drawbacks" instead of economic benefits. We are debating political economy--that point at which they intersect, to put it into academic terminology. It is useful at times to distinguish economic calculations from policy, but to fail to see how they inform one another distorts the bases on which these kinds of decisions must be made. First, I will address the empirical aspect of the argument. Then I will respond specifically to each of your points. As I indicated in my objection, the question of raising or lowering the tax rate for corporations cannot really be approached without consideration of the fact that many of the richest corporations do not pay anywhere near the going rate. According to the Government Accountability Office, the average corporate tax rate is only 12.6%. http://money.cnn.com... A report from the Citizens for Tax Justice found that 30 of the biggest 280 corporations had no federal tax liability whatsoever. http://www.nytimes.com... The argument that lower tax rates will keep business in the U.S. ignores these disparities. The assertion becomes more ridiculous if we ask just what the tax rate should be. Those thirty companies that completely dodged the tax system through offshore maneuvers have no incentive to bring business back into the U.S. no matter how low the rate is. If we still entertain illusions that the global market will somehow correct this, we can refer to this study: http://www.cfr.org... and this http://www.wsj.com... Nor are corporations to blame for the fact that they dodge taxes. Which indicates the significance of my second point. It is misguided to try to blame corporations for being greedy, and the recent attempts to publish CEO pay as a way of shaming these great disparities in wealth are rather pointless, because as I said above, all considerations for a corporation are subordinated to those of the bottom line. The issue, as you said, is not whether to abolish the corporate tax altogether. The rate reflects the societal costs of protecting the public from the inherent abuses of corporate activity. Now, that is a difficult calculation to make because many of those costs are integrated into a whole web of public and private institutions. In an obvious way, this means that the corporate tax rate needs to contribute paying for the SEC, FDA, EPA and all the hosts of other agencies out there whose job is to protect the public good from the undesirable results that occur when a corporation does precisely what it's supposed to do, that is make money at all other expenses. The argument that lowering the rate will incentivize business investment ignores the complexity of these costs. That is what I was getting at in the first part of my argument, which your rejoinder ignored. Corporations rely on able-bodied Americans to buy their goods and to supply them with labor. It is this complexity that maybe gave you the mistaken notion that I thought tax revenues were distributed randomly. My understanding of it is that there are three metrics on which the rate is decided: 1) equity, which evaluates how the tax rate is distributed across individuals taxes 2) efficiency, which tries to address potential distortions in the decision-making process due to tax burdens 3) competitiveness, which is, admittedly the most vague of the three--but it has to do with maintaining rates that are comparable to those of other nations with similar GDP. It is the third that seems to be your best shot for arguing the tax rate should be lowered. Yes, it is vague, but it is a problem only because we do not tax pure profits, as explained here (p. 16-17 specifically) http://www.fas.org... You said that while "we pronounce ourselves to be the most capitalist nation, we impose heavy taxation." Well, people pronounce a lot of things all the time--but if we mean by "most capitalist nation" that we are or should be engaged in some kind of free market laissez-faire system, completely free of public oversight, then you are mistaken. The so-called free market has already demonstrated that, left to its own devices, it is patently destructive and fatal to human interests. We have known that for more than a hundred years. In any case, that is a historical point which we can take up if you'd like. Nor do the present facts justify characterizing taxation on business as heavy, when compared with other industrialized nations. According to the findings of the CRS report mentioned above, the U.S. statutory rate is the highest, but the effective rate is the same as other OECD nations. In fact, the U.S. "collects less in corporate tax revenue relative to Gross Domestic Production (GDP) (2.3% in 2011) than the average of other OECD countries (3.0% in 2011). " As for your remark that the public has no say about investment in the private sector, yes, of course. But you missed the point. The issue is not dictating investment--it's that we have good reason to question simplistic narratives about growth, narratives that come from the financial industry and corporations that consecrate growth and try to convince us that it is an undeniable good. Lastly, you said that "[t]he private sector rarely benefits from public education. Most private sector jobs require a higher level education, which is in most cases provided by a private university or college." That preposterous statement is not the sort that will become any less preposterous by looking at the numbers, no matter how you spin them. For one, it's way too sweeping. Also, there is a huge part of the private sector that requires no level of higher education--nearly all the workforce of restaurant and retail industry, including the folks that make your burger or ring you up at the Walmart, nor their managers, known as middle-management, and a whole host of other working people on whom the private sector relies for the delivery of its goods and services. But more importantly, it is a gross distortion to separate the actual functioning of the private sector from the interests of the public good. Yes, there are specific occasions when such a distinction is required--for instance in legal contexts--but if decisions are to be made about political economy, we must find a perspective that understands how they interact.