We already have a "progressive" tax system in which ~70% of Federal revenue (not including SS & Medicare which are separate line items funded separately) comes from individual income tax.
Why can't we have a corporate tax that actually works and is evenly distributed instead of "progressive"?
The entire point of the US system at birth was for excise taxes to exist. You can make them astronomical on luxury items and keep them minimal or nonexistent on food, etc. to achieve a progressive outcome.
I spit on 16A. The US was designed not to have any direct tax, including federal income tax, unless it passed the apportionment test.
Direct taxes paid to the federal government are subject to apportionment in the US constitution. Therefore, for an income tax to be paid, it would have to be apportioned, meaning that states would have to pay a total amount equivalent to their proportion of the population.
If NY has 10% of the total population, 10% of income taxes would need to be paid from NY. Similarly if TX only has 2% of the population, the tax would need 2% of its funding from TX.
If everyone paid the same amount, this would be easy. But if you wanted to only tax millionaires, for example, that means that the millionaires in NY would be responsible for 10% of the total tax paid while those in TX would be responsible for 2%.
Now consider that there are 1000 millionaires in NY but only 2 in TX. Each NY millionaire would be required to pay (.1)(1/1000)=.0001 of the total tax bill while each millionaire in TX would be required to pay (.02)(1/2)=.01. Obviously those in TX would never agree to such a tax.
The goal with this is debated, but I believe it was done specifically to make passing direct taxes near impossible. Indirect taxes, such as excise taxes, are preferable since people only pay them if they want to. They can always elect to not purchase a good or service to avoid the tax. Additionally, it allows a much more progressive system than income taxes, since you can impose severe luxury taxes based on consumption only.
The 16A came along and changed this by explicitly exempting income from the apportionment requirements. Likely this was one of the major catalysts in the destruction of the American experiment.
Well as per the other points, VAT isn't actually a corporate tax that actually works - Firstly because it is a tax on consumer prices rather than corporate profits or revenue.
If you were a highly profitable oil drilling company, or were in the business of mineral extraction, or were an investment bank for instance, you would not be taxed at all under a 'VAT only' system.
IMO we might as well just say 'don't tax companies' - VAT isn't a substitute for a corporation tax, because it's not a tax on corporations (it's a tax on consumer purchases').
All taxes are ultimately born by the consumer. All. Of. Them. It doesn't matter how much you try and obfuscate the tax by introducing it at different points in the supply chain. If you charge a tax anywhere in the supply chain, suppliers will just increase prices and pass that cost onto the consumer.
Not really true - a corporate capital gains tax for instance is generally born by a companies shareholders rather than the companies consumers, so it's clear that some taxes can be directed more towards company shareholders than consumers. Similarly dividend taxes don't really put much upwards pressure on consumer prices.
So the idea of corporation tax is to try and structure a tax which puts pressure on corporate profits on very profitable businesses, rather than putting direct pressure on prices.
I mean it depends who you call a 'consumer' as ultimately someone has to pay, but the idea is to direct that to the richer capital-owners rather than the poorer, and VAT generally hits the poorer.
We already have a "progressive" tax system in which ~70% of Federal revenue (not including SS & Medicare which are separate line items funded separately) comes from individual income tax.
Why can't we have a corporate tax that actually works and is evenly distributed instead of "progressive"?