Why Corporate Income Tax Should Be Abolished - Essay Example

Why Corporate Income Tax Should Be Abolished Research has shown that the America corporate income tax is the highest in the globe. Today, corporate income tax stands at 35% while the same tax averages 23% in most parts of the world. The corporate income tax came about as part of President William Howard Taft efforts of taxing the rich. In the early, 20th century most corporations were owned by the rich. Despite having in place a personal income tax, most people felt like it was unfair as it taxed both the rich and working class at the same rate.

It was then that it was decided that corporate income tax would be helpful in taxing the rich. The author of this article tries to suggest that the benefits of abolishing corporate income tax would by far outweigh the costs in the long run. However, the author admits that the in the short run the cost would be high. The author then continues to give ten reasons as to why the corporate income tax should be abolished. I think that as much as abolishing corporate income tax may have benefits in the long run, the economy would be dealt with a huge blow.

The taxman collects billions of dollars using the corporate income tax. If this tax was to be abolished the government would have difficulties in financing its budget. The probable effect would be to find more avenues to tax the American citizens in order to raise the deficit. Instead of scrapping the income tax, the government should consider lowering it. This would make the conditions of doing business in the country more friendly. As a result, foreign investors would flock the country in pursuit of the American dream.

The main aim of the corporate income tax is to make sure that corporations too have a role to play in nation building by paying tax. The government provides the corporations with a good environment to do business and in order to support this; the government uses a substantial amount of funds. Therefore, the corporations should pay tax to ensure that the government is able to provide them with such services that enable them to be profitable. As much as the corporate income tax stands at 35%, some corporations have found ways to bring this number down to around 12%.

This is has been made possible through the introduction of tax refunds. Wealthy individuals will also find ways to incorporate their wealth to their corporations’ wealth. This would mean that the government would lose more revenue. The author states that at some point in history when the personal income tax become high, wealthy individuals incorporated their wealth to that of their corporations in order to pay the much lower corporate income tax. If the corporate tax was to be scrapped off, it should be done in well calculated move.

The benefits and the costs should be considered both in the long run and the short run. All the loopholes should then be closed to ensure people don’t take advantage of this as a way to avoid paying taxes. However, such a move would spell danger to the American economy. Work Cited Gordon, John. "Top 10 Reasons to Abolish the Corporate Income Tax." WSJ. 29 Dec. 2014. Web. 31 Dec. 2014. http://www.wsj.com/articles/john-steele-gordon-top-10-reasons-to-abolish-the-corporate-income-tax-1419899269