Corporate income tax avoidance in America

A couple of weeks ago I wrote about the latest report from our government on corporate income taxes: About 2/3 of corporations pay no income tax. That report is somewhat misleading because certain corporations (like the one I own) don't pay income tax on earnings, but the owner personally reports that income and pays the taxes. Technically the corporation is not paying, but the owner is paying on its behalf.

I also argued at that time that corporations don't really pay taxes anyway. Consumers do. As taxes are raised, prices consumers pay for goods go up to cover them. So if we're looking to "stick it" to the corporations, we have to remember that we're the ones really paying for it. (And do we really need higher prices now?) My third argument against making corporations pay hefty income taxes is the effect it has on innovation and the creation and maintenance of a company. The more costs involved in doing business, the less attractive it is to start a company, and the more likely it is that the companies (and jobs) will go elsewhere.

One think tank suggests that corporate income taxes will be the next big "scandal" in business. (And don't news watchers love scandals?) There are many legitimate loopholes in the tax code, and companies pay big bucks to consultants and tax experts who help find them. But then there's the fine line that can be crossed... over into the illegal world of tax evasion.