9 minutes ago, GoddersUK wrote
The flip side of that argument is that the ultimate benefactors (particularly owners/shareholders) have already paid their share for that infrastructure so end up paying twice.
Work it through.
Suppose a corporation can pay 0% tax whereas an individual pays 30% tax. For argument's sake let's suppose that Joe makes $100k in salary from his boss, Dave.
Now Joe can do what most people do, and pay his 30% income tax of $30k, or he can decide to make a company Joe Corp. Joe can now be clever to (legally) avoid tax because of the 0% corporation tax.
Instead of Joe working for Dave, Joe Corp contracts to Dave. Dave pays $100k to Joe Corp instead of to Joe, but Joe keeps doing the same work as before, because Joe works for Joe Corp.
But that money went to Joe Corp, not to Joe, so Joe Corp pays 0%, not 30% tax, and Joe pays nothing because Joe Corp pays him $0 salary.
Now Joe still needs a house, of course, so how does that work? Well, Joe's new corporation decides its going to move into the housing business. It buys precisely one house - the one that Joe likes - and rents it out to Joe with a rent of $0 a year. That's a terrible investment of course, but you can't legislate to prevent companies making terrible investments. So anyway, Joe Corp is paying $0 tax, but Joe still gets a house.
But wait... Joe also needs to eat. Occasionally he might need some money. Well again, clever accounting can do this. Joe Corp provides an interest free 0% loan to Joe for $10k. That's not money that Joe earned, so Joe doesn't pay tax on it. Technically Joe has to pay it off, but you know what? Maybe Joe Corp decides its a bad loan and writes it off its books.
You see how this is all starting to play out?
Corporations don't "hold cash" for their owners that you can efficiently tax when paying out. Instead, they are their owners. Zero corporation tax is zero income tax on the owners of the company. Pretending that the owners are paying twice is just a misunderstanding of how high-value accounting actually happens in the real world.
Ideally corporations ought to be paying tax at income-tax levels, and we should abolish capital gains (i.e. profits on your shares are pre-taxed by the fact that the corporation already paid income-tax level tax on its profits), not the other way around. That way you'd prevent people from being able to use these perverse accounting structures to take advantage of how easy it is to live your life off of a company pre-tax rather than off of a salary after-tax.