Originally
posted by
Atryn:
archaic / Colo / SAM,
You may be more well versed on the tax proposals of GJ than I am. In the video I just watched of him speaking at CPAC2016 he proposed eliminating both the individual income tax and the corporate income tax and replacing it with a national consumption tax, based on the Fair Tax as a "starting point". He then went on to say that eliminating corporate income taxes would create tens of millions of jobs.
Our current statutory corporate income tax varies from 15% - 35% with most businesses at the 34% or 35% level. Our average effective corporate tax rate is ~27% with many businesses paying no taxes at all due to the various loopholes.
Under the most recently proposed Fair Tax legislation, the national consumption tax would be an effective 30% sales tax rate.
Most business spend most of their income, and many business spend more than their income. If all corporate spending is subject to a 30% effective sales tax rate, wouldn't that increase taxes on corporations? How would that lead to more jobs?
First of all, there are not many businesses that truly spend more than their income for very long. Those would be failed businesses. Most (if not all) attempt to show as little profit as possible on their taxes, specifically because our corporate tax rate is so high.
I remember being infuriated several years ago when I saw that the Obamas paid an effective tax rate somewhere in the teens, and my company, which earned profits equal to a tiny fraction of the Obamas' income, paid 60 cents on every dollar of profit to either a federal or state overlord.
If you read the wiki article you linked to a little more carefully, you'll find that the FairTax proposal would tax goods *one time*, when they are purchased by the consumer. Now, that does not even come close to meaning that "all corporate spending is subject to a 30% tax rate", as you stated. Businesses may consume raw products (steel, wood, etc etc etc) but this is not necessarily the majority of their spending. In the case of my business, the majority of my spending goes to payroll... Something upon which I'm taxed 15 to 20 percent, depending on which state we're talking about, and something upon which I would pay zero taxes if we got rid of our current corrupt tax system.
The current system allows every business to take some advantage of loopholes, and allows those with the most resources to really benefit. You see mega corporations achieving an effective tax rate of zero, but you'll never see a small business very far under 35%. This is as backwards and anti-competitive as you can possibly get.
