Wednesday, January 27, 2010

The Supremes Kill Corporations' Tax Argument

Corporations, unlike partnerships or other forms of business, are taxed before their earnings are distributed to the owners of the company. A stockholder pays taxes on dividends they receive, or on capital gains if they sell stock, but not on the per share earnings. However, he company itself pays taxes based on its income.

Many have argued for many years that this is wrong, that the owners are being taxed double. In other words, the company pays income tax, and so does the stockholder when he receives his part of the earnings, thus the owners of corporations suffer double taxation. The argument is that corporations should be treated like a partnership for tax purposes, passing the earnings per share onto the taxable income of stockholders. I have never bought into this argument for several reasons. Primarily, corporations use the facilities that taxes pay for in this country....police, roads, courts, national defense....just like the rest of us "citizens", and since corporations have the rights of citizens, they also have the responsibilities.

The Supreme Court pretty much killed any logical argument that the "double taxation" crowd had. Since they have affirmed that corporations are citizens with the right of free speech, then they must also be citizens with the right to pay taxes. The campaign finance laws did not impede the free speech rights of individuals, just corporations. So stockholders already had the right to spend their money on campaigns. It only makes sense then, that if we are granting corporations all the rights of real people, they get to join us in paying taxes as well.

Speaking of the rights of citizens, Jon Stewart pointed out the other night that corporations now have more rights than gay Americans. They can marry (merge).

1 comment:

bananarama said...