Updated! The corporate tax code is an anachronism, eliminate it! Updated!

Corporate tax reform is vital to boosting America’s growth - FT.com

Eliminating it will remove one of the greatest hidden taxes on the poor, and will significantly limit corporate cronyism. 

"After more than a year of campaigning, the Republican and Democrat nominees have entered a sprint towards polling day. And, as Donald Trump and Hillary Clinton begin to outline their economic visions for restoring growth and improving the living standards of the American people, they should stress one essential ingredient: capital formation.

Capital formation is a little-understood subject with far-reaching consequences. In brief, it is the accumulation of machinery, equipment and intellectual property that has an impact on the operations of a business beyond a single fiscal year. This includes tractors and combine harvester for farmers, factories for manufacturers and software for tech companies.

As businesses build up this capital, they increase the productivity of their employees, who are then able to produce more. Productivity growth, in turn, is the key to increased innovation, job creation, higher wages and economic growth.

Unfortunately, capital formation has waned in recent years. A large part of this is the result of a return to the normal cycles of business investment. Investment soared in the late 1990s and early 2000s, thanks to advances in technological sophistication, especially those relating to the spread of personal computers and the internet.

Since then, capital formation has returned to levels last seen in the 1980s. Non-residential business investment in the US is 12.9 per cent of gross domestic product, compared with 13.4 per cent in 2007 and 14.7 per cent in 2000.

Unfavourable government policies have also played a role. The American tax code, in particular, exerts a downward pressure on capital formation and therefore on economic growth. It is now 30 years since the passage of comprehensive federal tax reform in the US. In the intervening years, nearly every developed country has reformed its tax codes to make them more competitive than that of America. Meanwhile, the US has allowed its tax code to atrophy."

The correct tax rate is 0. The sooner the better.

Other necessary tax code changes are to eliminate the income, estate, and gift, and payroll taxes, and replace with a consumption tax, preferably one which is obvious to the consumer like an add on sales tax. Contract with the states to collect the sales tax within the framework of their existing sales tax systems, and remit the funds to the federal government.

Eliminate the regressive aspect of this tax by retaining only the EITC portion of the Income Tax, allow persons of limited means to file an income tax voluntarily to capture the EITC rebatable credit. 

Then build a number of protected accounts for daily needs, retirement, health care, and other such which are protected from bankruptcy, and government levy (they will not need the income tax protection we have today, but they can still offer fiscal security from other issues.

Reduce, or eliminate the welfare state by channeling all the federal funding into the EITC program, and offer an avenue for immediate access where people fall into economic hardship quickly. 

We just eliminated the need for 95% of the IRS, the 5% would likely be necessary to collect sales tax, and pursue sales tax fraud, and crime, and administer the EITC program . We eliminated the need for the majority of the welfare state, by converting it to EITC, from individual assistance, housing assistance, medical assistance, etc. 

The system would be less regressive than the income tax, payroll tax, corporate tax, and gift/estate tax system. It would also be simpler, and save tens, perhaps, hundreds of billions of dollars each year in tax accounting, and legal payments. 

With the low cost of energy in the US, this would attract manufacturing firms to the US, and corporate headquarters to the US. 

Progressives will piss and moan about this for a few nonsense reasons, but listen carefully, and you can hear the wind whistling through their ears.