Thursday, December 8, 2011

Understanding Ron Paul: Corporate Tax

By Dan Beaulieu

 "I am an imperfect messenger, but the message is perfect"  –  Ron Paul

One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.

For this reason I present to you my series:  

Understanding Ron Paul

Corporate Tax

I have encountered a few individuals who said they would not vote for Ron Paul because he would lower the corporate tax, essentially arguing that he is working to benefit the 1%. This is a simple fallacy that can be easily debated.

When an individual pays a tax whether it be a sales tax, income tax or other form of taxation they pay for it with their own money, this we know. However, for some reason the arguer does not grasp how a corporation pays a tax, they assume that the corporation, like the individual, pays a tax from its profits. This is not the case, the corporation pays its taxes in the price of its goods. If you raise a corporations tax rate by 15%, the corporation simply raises the price of its goods by 15% to make up for the difference.

The current corporate tax rate is 35%. Ron Paul’s Plan to Restore America would reduce that rate to 15% which would make America more competitive on a global market. Simply put, if corporate taxes are reduced the corporation would most certainly lower the price of its goods or services to compete with other companies in their industry. Lower prices draw more consumers, both domestically and globally, higher sales translate to more production and more production translates to more jobs for Americans.

 In summary, an excessive tax on a corporation is a hidden tax on the people, while a lower tax on a corporation leads to job growth.

Back to Understanding Ron Paul Index

Suggested Reading: Henry Hazlitt 'Economics in One Lesson'

1 comment:

  1. I think it's likely that a President Paul would pressure Congress to remove sweetheart deals from the tax code, and certainly veto any new ones that came across his desk. Many companies, especially small ones without lobbyists working for them, would pay less - but companies that are currently paying extremely low taxes due to their connections in Washington wouldn't see a similar decrease. The idea of "paying one's fair share" gets abused frequently, but in this case it's exactly what needs to happen along with the general reduction.