Kevin Williamson explains at National Review Online why President Trump should take an even bolder step in addressing the federal corporate income tax.
Donald Trump’s tax plan calls for reducing the corporate-income tax to 15 percent. That’s about 15 points too high.
Mitt Romney was mocked for insisting “corporations are people,” but he was right: A corporation is a cooperation, a group of people acting together as one corpus for a particular purpose. And it would be easier and more simple to tax the people. …
… What would happen if we simply eliminated the corporate-income tax entirely?
It would not represent a tax-free windfall to a bunch of pinstriped boardroom schmucks and Wall Street types and corporate shareholders. There are all sorts of things that businesses could do with that extra 40 percent of whatever they have left over after expenses. But if they pay it out in salaries and bonuses, whether to fat-cat executives or ordinary line workers, those people pay the individual income tax on that money. If they pay it out to shareholders in the form of dividends, the shareholders pay the capital-gains tax on that money. If it is distributed through other capital gains, the same thing applies. If it is used to acquire facilities or equipment, then that money becomes income for another company, which has the same choices about how to dispose of it. The money still gets taxed, but not until it hits someone’s bank account.
