Dollars and Sense on Corporate Taxes

Voters are suckered by politicians into believing corporations pay taxes. No, they only collect them and then deliver them to the IRS…

Excerpted from the WSJ article, “Google’s Bermuda Billions” (subscription req’d)

J.P. Morgan estimates that American companies currently hold a cool $1.7 trillion in profits outside the U.S. They keep them there because if they brought them home, they’d be taxed at 35%.  …

In a saner world, a business would pay taxes once, when the profits are distributed, and governments would abandon the idea that the corporation even pays taxes. The truth, as economists understand, is that corporations are essentially tax collectors. Ultimately the corporation’s owners, employees, and customers bear the cost of those levies.

But if that’s a political leap too far, governments that rail against corporate tax-avoidance would do better to lower rates, and with them the incentive to avoid tax in the first place.