WASHINGTON (Sept. 22, 2016) – The corporate income tax enjoys overwhelming popular support, even from many who traditionally favor lower taxes. Unfortunately, the policy is so popular largely due to widespread misunderstanding of how it actually functions, according to a new policy short from R Street Executive Director Andrew Moylan.

“Because it is assessed at an institutional level, the corporate income tax indulges the fiction that revenue is extracted from a nameless, faceless entity, rather than from individuals, many of whom are not wealthy,” writes Moylan. “Its structure obscures the fact that the corporate income tax is just an attenuated form of individual taxation.”

In addition to simply serving as a rebranded tax on individuals, taxing at an enterprise level also leads to significant market distortions, including compliance costs estimated to drain from the economy the equivalent of the combined net earnings of Apple, JPMorgan Chase, Berkshire Hathaway, Wells Fargo and Exxon Mobil Corp. And despite its inherent complications, the author points to data indicating the corporate income tax doesn’t bring in nearly as much revenue as many believe.

“For all of its compliance costs, incalculable lobbying expenses, the perverse incentives it creates, the harms it does to our economy and the ways it poisons our politics, the corporate income tax doesn’t raise very much money,” concludes Moylan. “Eliminating it would at once free up $140 billion in annual capacity, encourage the repatriation of trillions of dollars of capital currently held offshore, and turn the United States into the world’s premier destination for highly mobile multinationals who seek favorable legal climates.”

Featured Publications