Corporation Taxes Drives Down Prosperity : Everyone A Loser

Please explain something to me, exactly what tax would a progressive socialist liberal left democrat agree was bad for corporations? It's a fact that a majority of the wealth in this country is held by democrats and they are well invested in corporates of all sizes and shapes. The question remains is why do they demonize the corporations all the while reaping "profits" from them?

Don't democrats hate 'profits'? Of course it's just politics as can be witnessed by the nonsense that is Michael Moore and other progressive democrats that proclaim their haltered for corporation, all the while fattening their personal bank accounts by investing their millions of dollars they have gotten from corporation and other free market enterprises in our hated capitalist system and overseas institutions to hide the money they say, demand you should be taking from your bank account which should  be going to the disadvantaged.

It's the right thing to do. It will make you feel so much better about yourself. Did you ever wonder how much Moore gives to charity? Do socialists give at all or just take?

WOW - what good reasons to vote for more democrats, right? It seems a large percentage of Americans just can't get enough of a lie. 'Whip master, please whip some more'.

Corporate Taxes Have Hidden Costs
Source: Tim Sablik, "Taxing the Behemoths," Federal Reserve Bank of Richmond, 2013.
January 17, 2014

Corporate income tax revenue has fallen as a share of federal revenue from 30 percent in the 1950s to around 10 percent today, says Tim Sablik of the Federal Reserve Bank of Richmond.

After accounting for state tax burdens, the United States boasts the highest corporate tax rate in the developed world -- a whopping 39 percent rate. Many economists suggest that the rate should be dropped to zero.

As to who actually pays the corporate income tax -- shareholders, workers (in the form of lower wages) or consumers (in the form of higher prices) -- economists are mixed.

• Arnold Harberger, in a 1962 study, found that the burden of the tax fell on the shareholders.
• On the other hand, Alison Felix, an economist at the Kansas City Federal Reserve, found that a 1 percent increase in the marginal state corporate tax rate led to a reduction of wages between 0.14 percent and 0.36 percent.
• But Jane Gravelle, economic policy specialist at the Congressional Research Service, insists that there is no evidence that wages suffer from higher corporate taxes.

Regardless, the corporate tax leads to market inefficiency and a number of consequences:

• Corporations can raise money through equity or debt financing. But because debt financing has an effective marginal tax rate of -2 percent (versus a 40 percent effective marginal tax rate on equity financing), debt financing is more preferred. Highly leveraged firms, however, have a much greater risk of bankruptcy.
• The tax also creates incentives for companies to retain their earnings rather than pay them out in dividends. By retaining earnings, shareholders' overall tax liability is kept lower due to the fact that dividends are taxed twice. But keeping those dividends out of shareholder hands prevents shareholders from reinvesting those funds in other projects, leading to market inefficiency.
• Multinational corporations also have an incentive to keep earnings abroad rather than bring them to the United States due to the tax rate, because bringing that money back into the country requires the taxpayer to pay the U.S. tax on that income. Even though companies are given a credit on the difference between the U.S. and foreign rate, many companies choose to keep that money abroad rather than pay the higher U.S. tax.

There are a number of policy proposals to deal with the corporate income tax. Some lawmakers have advocated changing to a territorial tax system rather than the United States' current worldwide tax system. A territorial tax system -- which more than 80 percent of Organization for Economic Cooperation and Development countries employ -- would only tax domestic corporate income, meaning that multinational corporations would be more likely to invest at home because they are not taxed when they try to bring those profits back into the United States.