Perhaps even more important, government really enjoys manipulating our behavior — and the corporate income tax is a great tool for doing so. If they want us to use more solar power, they create a tax break for companies that produce it. If they want companies to create certain kinds of jobs or invest in particular technologies, they can push them to do so by way of the corporate tax. In short, they can pick winners and losers. Take away the corporate tax, and it becomes much more difficult for government to “manage” us.
Letting government pick winners and losers is not a good plan. Making it harder for them to do so would be a very good thing.
Many politicians of all stripes are talking about reducing the corporate tax rate. If reducing it is a good idea, eliminating it entirely is a better idea. Some of the hesitation about eliminating it is a concern that we would all run out and incorporate ourselves. I’m not convinced that would actually happen, but even if it did, I’m not sure it would be bad. If the way we tax people today falls apart, the unavoidable result would be a long-overdue examination of and debate over a better, broader and more logical tax system.
I’m all for that.
Gary Johnson is the honorary chairman of the OUR America Initiative (www.ouramericainitiative.com), a 501(c)(4) advocacy committee. He is also the former Republican Governor of New Mexico (1994-2002), and has been a consistent and outspoken advocate for efficient government and lowering taxes.