Thread by @shrikanth_krish

There is much talk on Corporate tax reduction in the Indian budget

But we must remind ourselves once in a while that Corporate tax is something worthy of abolition

It is a bad tax in so many ways

First of all corporations are not people. And only people pay taxes

We may kid ourselves into believing that this tax is paid by "corporate" entities

But the brunt is borne by real flesh and blood people -

Share-holders
Employees
and most of all
Consumers

And all of these individuals do pay taxes in other ways

Share-holders do pay the Dividend tax
They also pay tax on capital gains

Despite the corporation getting taxed!

So it is a form of double taxation

One of the reasons why the Corporate tax is unfair is because the "Net income" of the company is not "income" for any shareholder

A company can make a lot of money, and yet earn nothing at all to its shareholders

Shareholders earn income on capital only when they realize capital gains, or when they receive dividends - both of which are taxed

And yet though the Corporate tax is not levied on income earned by shareholders, it does impact the shareholder income by depressing stock valuation

The Company management can react to corporate tax in other ways too -

Passing the burden on to consumers in the form of higher prices

Reducing pay hikes for employees

Both of which hurt the common man, who is not an owner of capital at all

Corporate tax has other mal-incentives

It makes Debt preferable to equity as a source of capital, given the tax deductibility afforded to debt payments

This results in greater leverage in the economy than what might be deemed healthy or natural

So it is most definitely a tax that is immoral in its foundations.

Depresses the income for shareholders, though it is not levied on their income per-se

Raises prices for consumers

Reduces goodies for employees

A bad tax in many ways