Untaxing-III (Laffer Curve) ch 15: Defending a $0 Corporate Tax Policy
When $0 corporate tax is a defensible option, should we continue a 35% corporate tax rate that causes 25 million people to be unemployed, lost customer purchasing power and a $13.49 trillion loss in US GDP? When the corporate tax savings are released as dividends yielding more market value, why not adopt a 12% corporate tax? Preposterous. It’s got to be $0 in corporate taxes.
It is clear in Table 6 below that a $0 tax on corporate profits and a realistic 35% short-long term capital gains tax will produce the most equity value for shareholders and the most tax revenue for the government ($3.5 trillion per the last row in the Future Tax Gain column).
A realistic public company tax policy on corporate profits of $0 corporate taxes and a 35% capital gains tax will give the US Treasury a capital gains tax base of $10 trillion instead of the 2008 profit tax base of $857.142 billion. The consequence is a predictable short-long term capital gains tax revenue of $3.5 trillion.
This $3.5 trillion (see last row of Future Tax Gain column in Table 6) exceeds the entire federal taxes collected in 2008 by a whopping $1 trillion!
This $3.5 trillion in a short-long term capital gains tax stream is also 1,167% more than the $300 billion that the US Treasury collects now from both public and non-public corporations.
Please understand what is said. A $0 tax on corporations of all types will cause the US Treasury to collect all of the taxes that it requires from capital gains without taxing corporate profits or taxing individual wages and salaries!
In Table 7 below, you find a prediction based on time and percentage. A predictable $315 billion is collected in 6 months, $630 billion collected in 12 months, and $945 billion collected in 18 months as tax revenue from short-term capital gains on just 9%, 18%, and 27% of the increase in market values of 19,893 US public companies. The prediction relies on a release of corporate tax savings as dividends and for some of the resulting increase in market value to be sold.
The clear assumptive error in the Laffer curve assumes that the US treasury will not receive any tax revenue when the corporate tax rate is $0 for the public company.