Saturday, May 3, 2014
Should We Eliminate The Corporate Tax And Tax Shareholders Instead?
Pfizer's use of the inversion tactic to avoid US corporate taxes is not a good sign. Corporations have numerous ways in which they can shift profits to low tax countries. This proposal from a scholar, at the conservative American Enterprise Institute, proposes that we end the corporate tax and shift the tax burden to shareholders. Dividends would be taxed at the ordinary income rate as well as the capital gain on share values each year. One of the problems with this solution is that total federal taxes would substantially decline. Congress would than have to find new taxes to plug the gap.