Taxing Corporations and Dividends is Not Double Taxation

Mitt Romney argues that the 14% tax rate he pays is fair, even though most of the rest of the citizens of this country pay a much higher percentage of our income.  Mitt says that his 14% is fair because his income is dividend income, and the Corporation has already paid Corporate taxes, so he is in effect being taxed twice.

Leaving aside the fact the Corporate Income Tax is so chock full of loopholes many Corporations pay little or no tax, Mr. Romney's argument is even more fundamentally false.

Corporations are not real.  They are a fiction created by the law in order to encourage people to make big, risky investments.  A Corporation allows the owners to make big investments, if they do well they get the profits, if it really goes bad, they get to dump calamitous losses on society, instead of absorbing it themselves.

Examples?  

Think of the financial collapse we went through a few years ago.  The Bankers and Brokers that made tons of money on the stupid business ideas that caused the crash are all still sitting on most of the money, because they operated within Corporations.  Their corporations may now be bankrupt, or defunct, but the people who owned and ran the Corporation still have all the money they made.  Who bore the risk of loss?  The homeowners who lost their homes.  The investors that lost much of their wealth.  The workers out of a job.

Think of the thousands of plots of land all over this country that are so contaminated with hazardous chemicals they have to be fenced off from public access until someone spends millions to clean up the mess.  Generally the mess was made by Corporations that made people very wealthy.  The Corporations may be gone, the owners are probably still very wealthy, but it is often government who ends up cleaning up the mess.

That is why Corporations pay Corporate taxes.  To compensate society for the risk society is taking that other people will end up paying the price for Corporate folly.  Corporate taxes are not a substitute for every citizens obligation to pay their fair share of taxes for running government, they are a cost of doing business as a Corporation.

It is very easy for anyone to avoid Corporate taxes, you just dump the corporation and do business as a partnership.  But rich folks don't do that, because if they do, they might actually have to pay for the messes they create.  

Mitt should know this.  The self proclaimed great businessman who understands how business works has undoubtedly had lots of discussions in his life about whether a business should incorporate or operate as a partnership.  But I guess he calculates a lot of regular folk don't, so he can make the argument and get some votes.