alt Hacker NewsThe tax rate for corporations should be zero. The need to do tax accounting and associated financial engineering is a deadweight economic loss. Eliminate corporate income tax and raise taxes on the highest income employees and investors to make the change revenue neutral. Ultimately the profits flow to those individuals one way or another so better to collect all the tax revenue from them anyway. This change would increase economic growth and benefit everyone.
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I think each company should pay a low rate on all money passing through. Let’s say 0.1 to 1%. Building huge pyramids of shell companies has probably no economic benefit and is mostly done to evade some regulation or taxes or liability. The ideas how to abuse this are too numerous to count so the government should not try to but simply disincentivize the use of corporations just a little bit. The cost would be borne by the individuals who have the most elaborate company architectures which is probably synonymous with the biggest tax evaders.
That would work if you were going to use VAT for everyone, but as long as you're using income tax for individuals, setting the corporate rate to zero would be an obvious tax dodge. You'd put all your assets and income into a corporation that pays no taxes and then have it loan you money when you want to spend it on something.