Wage Slaves

Shorter Megan McArdle: Shift all the tax-paying burden onto individuals.

You know, I think she's starting to convince me. I know I've said different in the past--that after corporations steal all the money they can get their hands on they'll eliminate all benefits for others and taxes for themselves, then force Americans to work for third world wages--but it's all starting to make sense.

The American government loves debt. It offers special tax breaks to interest payments-mortgage interest, if you're a person; all interest, if you're a firm. This has a number of pernicious effects. On the personal level, it's a gift to home sellers--as we've seen with the homeowner's tax credit, any special break you give to home buyers tends to end up in the pockets of home sellers, as the buyers bid up the price to their maximum affordable net monthly cost. On the corporate side, it privileges debt over equity financing. In both cases, it adds considerable risk, since the fixed debt payment schedule may not match up with the flow of income.

The corporations deserve all the money. If people have money then they will be to pay for things, and the prices of those things will rise. This will hurt the poor, who now can only afford cheap goods from low-paying corporations. Therefore all tax burden must be shifted to individuals, so corporations will not be over-taxed.

[T]o drag out my regular hobby-horse, it's an even better reason for getting rid of the corporate income tax entirely, along with the special tax rates for capital gains and dividends. Tax income once, when it's distributed to the owners, and then tax that income just like any other kind of income, regardless of source, so that Paris Hilton pays a higher rate on her corporate-derived income than your middle-class grandmother. Then let companies decide which mode of financing makes the most sense for their capital structure, rather than their tax bill.

And corporations must not pay taxes because Paris Hilton has too much money to spend.

I wonder if any of McArdle's descendents ancestors were indentured servants. She seems to be doing her damnest to return to that blissful state. If people should be able to sell their organs, why not their freedom? It's the Free Market thing to do. What's a little slavery amongst friends, when so many wealthy elite can benefit?

UPDATE: McArdle adds that while she has just said that one reason to eliminate corporate tax is because they'll just find a way to evade it, individuals will not be able to evade their own taxes. Because they won't.