Saturday, November 18, 2017

Why Pick On ‘Rich Corporations’, Benefactors of the Middle Class?

The rhetoric over the Republican tax plan more often than not is long on meaningless generalities and short on rational analysis. Consider the New Jersey Guest editorial by NJ Senator Cory Booker, Trump's unfair tax plan will harm average New Jerseyans. Booke, whom I consider one of the more balanced Democrats, seems more concerned with not cutting taxes for the rich that fairness for average New Jerseyans:

At the start of every month, in New Jersey and across the country, countless families sit down to plan their household budget. They are making hard decisions about how to juggle their mortgage, college tuition for their kids, grocery bills, and the cost of medical care, all while hoping to have something left over to save. And too often, as costs rise and wages stay the same, instead of savings, bills stack up, payments are missed, and debt grows.

Meanwhile, down in Washington, Congressional Republicans and President Trump are also working on a budget. But despite the real needs of everyday Americans, the plan the President and Congressional Republicans are announcing today is a massive tax giveaway to the largest corporations and wealthiest individuals at the expense of those who need tax relief the most.

I'm fighting hard to make sure that New Jersey families and homeowners aren't made to shoulder the burden of a massive tax giveaway to the very richest corporations and individuals in this country. That begins with stopping schemes like eliminating the state and local tax deduction, and your voice is critical in this effort.

Booker’s complaint seems to be that eliminating the state and local tax deduction while cutting corporate tax rates (individual rates appear to be staying at 39.6%) amounts to forcing middle class taxpayers “to shoulder the burden” of the “tax cuts for the rich.” This seems superficially true but they are really two separate issues.

I left these comments:

I can see debating the merits of the GOP tax plan. By why the railing about the rich? This mindset is particularly bizarre in regard to corporations. How do “rich corporations” grow? By catering to the middle and lower classes (statistically speaking). They grow through mass market products.

We have successful business corporations to thank for the fact that we have the rich assortment of choices relating to home mortgages, college tuition, groceries, medical care, and all the other myriad choices corporations give us, including job opportunities. Historically, people couldn’t even dream about having all these opportunities to “balance”. We have successful business corporations operating in a relatively free market to thank for that. The simplistic political demagoguery that pits “us against them” ignores the fact that the corporation is an alignment of individual interests that benefits all. What we call “the economy” is an integrated entity, not a disintegrated zero-sum. People grow wealthy in America primarily by starting, building, running, and investing in great entrepreneurial businesses. Investors, employees, and consumers grow along with the corporations. The “very richest, largest, and most profitable corporations” are truly middle class institutions.

A business corporation—what Steve Jobs called “one of the most amazing inventions of humans”—is a legal and abstract framework for people to work together toward a common productive mission. The money the company earns in revenues and profits furthers that mission, until and unless it is paid out in employee compensation, dividends, interest, and capital gains for investors, and mass market products to consumers—at which point it is taxed through sales taxes. A corporate tax is in effect double taxation.

A corporate tax is dishonest and regressive. We can see the property taxes we pay. We can see the personal income taxes. We can see the sales taxes. But it’s not so clear that we as investors, employees, and consumers are actually the ones paying the corporate income tax. But, one way or another, we are. The corporate income tax is a way for politicians to suck more money out of all of us without us seeing it. Given that corporate profits fuel innovation and growth, it hurts us all. Only individuals pay taxes, and we can debate how these taxes should be distributed (I favor a single flat-rate tax). But it’s stupid to tax the corporation, before it filters into individuals’ hands. Far from complaining about the corporate tax cuts, we should demand an end to corporate income taxes.

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