Saturday, September 28, 2013

Corporations aren't people, so why tax them?

"Corporations are not people" has been a popular rallying cry over the last few years. One of the contexts in which it is often used is to support raising taxes on them. That's what the hecklers in this infamous Romney video seem to be saying. People apparently get upset when a corporation pays less taxes than them.. but really, if they are not people, then why compare them to yourself in this way? Why even tax them at all?

Think of a rock band. Let's say they have a singer/guitarist that makes a lot of money, a drummer and bassist who make a decent amount of money, and some techs that make a little bit of money. We already tax all of those people based on the amount they make. Nobody claims that we should additionally tax "the band", because it would still be the people who pay the tax, maybe with some of it being covered through raising the price of their product. Clearly, a "band tax" would just uselessly increase the complexity of our tax code - if we need to raise taxes it would be better to just raise them on the people directly.

Now, how is a corporation any different in this regard?