Re: Subject: Double taxation

[Seth Sandronsky <ssandron@xxxxxxxxxxx>]

For brief clarity to your neighbor: corporations have all the rights of
people without their responsibilities.  Mainstream pols and pundits use the
term personal responsibility to gut social spending and back the market.
Invert the term to clear the fog from above.  PR, indeed!

Seth Sandronsky

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Date:    Fri, 6 Jun 2003 09:06:38 -0500
From:    Bill Lear <rael@xxxxxxxxxx>
Subject: Double taxation

In today's NY Times, Paul Krugman writes:

    Less  attention has  been paid  to  fine print  that reveals  the
    supposed  rationale   for  the  dividend  tax  cut   as  a  smoke
    screen.  The problem,  we were  told, is  that profits  are taxed
    twice: once  when they  are earned, a  second time when  they are
    paid out as  dividends. But as any tax expert  will tell you, the
    corporate  tax   law  is  full  of   loopholes;  many  profitable
    corporations pay little or no taxes.

Notice the contrarian coda.  Why not one that flatly contradicts the
lie, as Dean Baker does here (Economic Reporting Review, May 27, 2003):

    All  corporate income  is already  taxed only  once.  Income that
    corporations pay  out to individuals,  such as their  workers and
    shareholders, is subject to taxation, but income at the corporate
    level  is only  taxed once.  The tax  at the  corporate  level is
    optional,  in the sense  that if  shareholders believed  that the
    benefits  granted  by  the  government to  corporations  did  not
    outweigh the burden  of the corporate tax, they  would reform the
    corporation  as a  partnership.  The  fact that  they voluntarily
    choose to  structure their business  as a corporation  means that
    they think the benefits exceed the cost of the tax.

or here (Economic Reporting Review, May 19, 2003):

    Corporations  and individuals  are distinct  legal  entities, who
    each pay tax on their income only once.

    This  legal distinction  is extremely  important.  The government
    grants many valuable privileges to corporations, most importantly
    limited liability, that a  group of unincorporated individuals do
    not have.   The value of these  privileges is proven  by the fact
    that  individuals voluntarily  create corporations,  knowing that
    income will be  taxed at the corporate level.  In this sense, the
    corporate tax  is entirely voluntary -- if  individuals felt that
    the  privileges the  government  grants to  corporations did  not
    outweigh the cost  of the tax, then they  would form partnerships
    and avoid the corporate tax altogether.


Bill

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