by Ed Sawicki
Is the solution to massive social inequality an increase in corporate tax rates?
No. Corporations are not like individual taxpayers. They don't pay taxes with their own money—they're tax collectors. Any taxes they pay are paid for by their customers. Corporate taxes are in effect sales taxes.
Sales taxes are regressive taxes that are harmful to the poor and middle class and contribute to social inequality. With regressive taxation, the poor pay with money better used for food, rent, and health care. The uber-wealthy pay with pocket change.
Instead of making a fuss about corporate taxes, we should instead increase individual income tax rates on upper-income earners. An excellent first step is to add margins to the tax tables for the uber-wealthy—the billionaires.
The second step is to reduce the tax rate on low-income earners. Reducing the current lowest margin (Up to $9,525) to zero for the next decade—or forever—would be a wise decision.
Here's an example of a workable tax table that accomplishes both steps. The green rows show the changes to the current tax table.
|Tax Rate||Income amounts|
|0%||Up to $9,525|
|12%||$9,526 to $38,700|
|22%||$38,701 to $82,500|
|24%||$82,501 to $157,500|
|32%||$157,501 to $200,000|
|35%||$200,001 to $500,000|
|45%||$500,000 to $1 million|
|55%||$1 million to $10 million|
|70%||over $10 million|
Additionally, we should tax capital gains the same way we tax ordinary income. It should be a progressive tax designed to minimize the impact on middle-class 401K plans. The capital gains tax rate should be the same as for ordinary income after, say, $350,000 and adjusted for inflation yearly.
Complain about Amazon not paying taxes all you want but that's not the solution. The solution is for Jeff Bezos (and all other billionaires) to pay his fair share.
It was my friend Rick Watkins, a Texan, who educated me about corporations being tax collectors back in the 1970s.
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