Corporate Taxes are Wrong

In my opinion, much of the evil that besets our modern economy can be laid at the feet of joint-stock corporations – that is, companies.  Limited liability creates moral hazard, and cuts conscience (which cannot be measured in the currencies by which corporations account for their actions) adrift.

But this is not an excuse for taxing corporations. There are two reasons it is wrong to tax corporations. Firstly, it is undemocratic. A democratic society should tax only its voters (remember the Bostonians: “no taxation without representation”), and corporations do not have a vote. Politically, of course, it is easier to tax bodies which do not vote,  but that does not make it right.

The second reason corporations should not be taxed is that corporation tax is regressive. In a progressive tax system, the profits of a corporation should be taxed via their members. A corporation is nothing more than a collection of people, its shareholders. Not all shareholders are fat cats; many, in fact, are pensioners, or those saving for a pension. Some, however, are indeed fat cats. Now, in a progressive tax system, the fat cats should pay proportionately more than the pensioners. But if you tax the corporation, they all pay the same.  Corporate taxes benefit fat cats, and damage pensioners.

On the other hand, corporations are not conscionable persons. The have a mythical legal personality, but without a conscience can have no human rights. So they have – or should have – no right to privacy, nor have any power to enforce any obligation of confidentiality.  Corporations should be absolutely transparent in their dealings. This transparency is the price that a corporation should be made to pay for the privilege of not paying tax.


1 comment so far

  1. […] and profit is subjective. It’s the wrong base on which to tax companies. I’ve written elsewhere at some length why I think that corporation tax should be abolished (since it is, effectively, a tax on pensioners […]

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