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January 19, 2011



Since corporate profits are supposedly up and hiring still hasn't occured, it doesn't make much sense that the removal of "burdensome" corporate taxes or regulations would lead us back to economic eden.


This is why I enjoy reading Mr. Carpenter. When it comes to figuring out politics, he's swift.

Mac Lichterman

Nice suggestion. However, eliminating corporate taxes will cause an immediate drop in dividends paid out, with a resulting drop in tax revenues. That's because investors will prefer capital appreciation over dividends. An unwanted side effect of this, closely held corporations would become tax shelters.

A better idea is to make corporate distributions of taxable dividends 100% deductible, and eliminate the special reduced tax rate for dividends. That way corporations avoid taxes by distributing out their profits.

If dividends are deductible to corporations, then corporate tax rates need to exceed individual tax rates to incentivise pay out of dividends. So maybe corporate tax rates should be raised.

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