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Wednesday, February 26, 2003

Put This On The List Of Things That Won't Happen

The Man Sans Q wants to repeal the corporate income tax. Set aside his arguments about increased economic efficiency, and a redeployment of creative minds towards truly productive ends. Repealing the corporate income tax is a great idea which won't happen because it totally violates the Russell Long formula for Painless Revenue Raising: "Don't tax you, and don't tax me; tax that fellow behind the tree".

The problem is, as much as earnest lefties might like to pretend otherwise, the corporate income tax is not paid by a cigar smoking Mr Exxon living high on a hill. The tax is paid by some combination of shareholders, bondholders, and the suppliers, employees and customers of a corporation. Hair pulling micro-economic analysis would be needed to estimate, industry by industry and company by company, just who was actually paying the tax through reduced corporate income, riskier debt, lower wages, higher prices, reduced output, and reduced employment.

With no clear winners, and screaming (albeit simplistic) opponents, a proposed repeal of the corporate income tax would be DOA. Darn.

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