What is missing from these discussions is a fact that most people overlook: Corporations do not pay taxes, corporations collect taxes. No corporation pays taxes, the consumers of their products pay taxes. If the government increases the tax rate, the companies increase the product cost to pay for it, and consumers get soaked.
But the average voter doesn't see this. He only sees "McCain gave big tax breaks to Big Oil, but Obama is going to stick it to those evil rich guys, and the world will be sunshine and rainbows."
Not all companies can pass on taxes. Companies with monopolies or duopolies or that make a high or critically demand product have a lot of leeway in raising the price.
In a true competative market, which doesn't exist in many sectors, but still does in others, they aren't able to pass on the tax increases.
Where you really see this is when American companies are competing against a foriegn company, such as China or even Japan and Europe, where they either have cheaper labor and/or government subsidation to allow them to undercut American made goods.
Which is one argument against increasing corporate taxes.
If we wanted our economy to grow, and employment to go up, then the government should eliminate ALL corporate taxes. Then companies would flock to the U.S., and employ a lot of U.S. citizens.
These citizens would earn income, and pay taxes. They would buy things, and pay sale taxes. The products produced by the corporations would be exported, because their costs would be low. More people would be hired for the increase in production.
The corporations would make a big profit, and either 1) pay dividends to their stockholders, who would then pay taxes. Or, 2) buy equipment / products, which would be taxed, or 3) hire more people, who would pay taxes.
After all, a corporation is only a piece of paper. If we aren't going to sign on to the Fair Tax, then we should at least eliminate all corporate taxes, which would encourage these corporations to move to the U.S.
What we should do is go back to the system that the founders envisions to pay for our government and that was no income taxes at all, but rather tarrifs on foreign goods.
Once we gave up our sovereignty to the global economy and 3rd party global governments, such as the WTO, that ceased to become an option.
I don't know that there is a solution under the current system. American literally cannot compete in a global economy. It just is not possible to compete so long as we want to retain any level of our standard of living as well as our environmental laws and workers regulations. So, we either have to decide we are not going to compete and remove ourselves from these global treaties or resign ourselves to the fact that our wealth and technology will continue to be sucked out of this country until we are little more than a glorified 3rd world nation, with a tiny super upper class a very small upper middle class and everyone else being in the lower class and dependent on government subsidies in one form or another.
That's exactly where we are headed.
