Corporation taxes are arguably as/more regressive than those on consumption, depending on who you believe ultimately pays them (capital owners/workers).
It can be argued that they fall equally on the rich and poor. For example, if the corporation had two shareholders, one in the top tax bracket and one in the bottom, their returns would be equally hit despite difference in their underlying incomes.
On the other hand, if the burden does fall mainly on shareholders then it can be argued that from a macro perspective corporation taxes are progressive since they are ultimately paid by wealthy households (which make up majority of large investors).
It could be argued, if you completely ignore the poor generally dont hold shares in companies, and that this thought experiment only works if you think the workers could ever get a decent share of the company value, which rarely happens.
No, the concept is economic incidence, and it depends on the elasticity of the markets involved to decide who pays for it.
The real calculation is very complex and requires deep anaylsis, but let me try to give some concepts on what could happen.
A flat tax corporate tax to every company will have more effects on the consumers than anyone else: investors will invest less than they would have without the tax, as profits go down (and will consume more of their capital), and it will happen until the profits go back to the previous point of equilibrium. They have a 1 time loss, and then never lose profitability again.
If investors dont lose out in the long term, but the state gains through tax, you need to put that on workers or consumers. workers have one trick up their sleeve: they can go independent and avoid corporate tax: either as a small businesses, or being a contractor of some sort. So some workers will win and some will relatively lose.
But the one without much help is the consumer: he cant really buy things that don't go through a private business, which means everything they buy has the tax in it.
And thats a flat tax: its never flat. A local RE developer cannot avoid corporate taxes, but Google that opens offices somewhere else can. Or businesses that have huge potential (again tech) can avoid paying the tax by reinvesting in themselves for decades, which mom&pop shop cant, thus some companies pay more than others. In consequence, more investors go to the lower tax companies, workers will go to those companies and consumers will find their products cheaper.
Fair point. Especially when retirement funds are major investors. In that case, I suppose progressive income taxes are the only good way to have progressive taxation.
Still, the idea of ending the race to the bottom by replacing local revenue (sales/consumption) taxes by local profit (sales - local costs) taxes, appeals to me. It would make labour and other local costs cheaper, and discourage outsourcing every aspect of business to the cheapest possible country for it.
> In that case, I suppose progressive income taxes are the only good way to have progressive taxation.
The key is to do progressive on the other side. Collect revenue with a flat consumption tax, then pay a uniform benefit, ideally a UBI.
If everybody pays a flat 30% tax rate and then everybody receives $10,000 in cash money, the effective tax rate for someone at $20,000/year is -20%. At $40,000 it's 5%. At $80,000 it's 17.5% and goes up from there.
So it's progressive but there is no arbitrage opportunity, no declaring profits in some other place, no weird cliffs or crazy high marginal rates on the poor due to benefits phase outs, the tax rate is uniform and applies the same to everyone without exception.
It can be argued that they fall equally on the rich and poor. For example, if the corporation had two shareholders, one in the top tax bracket and one in the bottom, their returns would be equally hit despite difference in their underlying incomes.
On the other hand, if the burden does fall mainly on shareholders then it can be argued that from a macro perspective corporation taxes are progressive since they are ultimately paid by wealthy households (which make up majority of large investors).