As early as 1819, well before there was any 14th amendment, John Marshall found, in the Dartnouth Colege case, that a corporation is a bearer of rights that a state must respect — in that case, the right to the fruits of a contract.

A corporation, he said, is an “artificial being, invisible, intangible, and existing only in contemplation of law” in order that the purposes for the sake of which it was created may be accomplished. Among the most important of its legal characteristics, Marshall continued, are “immortality, and, if the expression may be allowed, individuality — properties by which a perpetual succession of many persons are considered as the same, and may act as a single individual.”

Notice the word “person” in that passage? You should! A corporation is an entity through the creation of which “many persons are considered as the same.”

Which underlies my analogy. It was a perfectly good analogy, the fact that you don’t like the conclusion notwithstanding.

http://danshaviro.blogspot.com/2011/08/w arren-buffett-on-taxing-rich.html

As for talk of furnaces and such, most investors these days jump on the backs of wagons with furnaces already bought and paid for. Few CEOs are major shareholders, and even fewer of them actually took a risk in starting (or running) a new business.

Even looking at modern tech start ups such as Google or Facebook, those businesses were set up as college projects with little if any capital investment at all from the founders who had a good idea perhaps, but really injected no risk capital of their own.

Let’s just assume for simplicity’s sake you divided the corporate tax into your three groups (employees, investors and consumers), then a 35% rate is now reduced to 11.7%.

Tim, I suggest: http://goo.gl/eEeTX

Not a good analogy at all. A corporation (which is NOW a person according to Scalia and Co) and its employees are different entities completely. Employees get a cash flow from corporation (salary) and pay taxes on it including the CEO. The corporation pays no taxes until it has paid ALL its employees , including the CEO, until it has paid all its suppliers, paid all its capital expenses etc. , whatever it has left over after it pays those things it can transfer cash flow to shareholders, which they should pay taxes on, including the CEO who owns stock. Its NOT double taxation they are completely different flows of funds. Yes they all came from sales but so what…….. EVERYTHING always comes from sales. Employees/CEOs are not like cells.

That’s simply a weak argument, Felix. After all, when we discuss the connection between (a) taxing the corporation and (b) taxing its owners, we aren’t talking about two different places where the money has been while it has been “sloshing around” at all. We are talking about two different perspectives on the SAME place at the same instant.

A corporation is a network of contractual relationships. It is complicated enough to be looked at from different perspectives. And then double taxed from two of these. That doesn’t require any intermediate sloshing.

It is as if the government taxed me as a multi-cellular organism, and separately taxed my cells for receiving nutrition from — me. I am my cells, and they are me, from different perspectives. That would indeed be double taxation.

Umm, that’s because nearly two thirds of corporations are S corporations who are not subject to the corporate income tax, the shareholders pay personal income tax on profits instead.

And there’s always the occassional company, of either kind, that doesn’t make a profit. You know, like GM, Chrysler in some years?

…since corporate charity came out of pretax income, Mr. Buffett’s good intentions were being subsidized by taxpayers both rich and poor. Similarly, Mr. Buffett’s commitment to download the majority of his fortune to the Gates Foundation means a huge tax savings. Since Mr. Buffett is so keen for fellow billionaires – and for the merely moderately wealthy – to cough up more, no doubt he will forgo these charitable tax breaks, just to make sure he pays his “fair share.”

Perhaps Warren Buffet pays too little tax not because he’s mega-rich but because the US tax system is designed by rich people for rich people, who have the resources to take advantage of it. Why not, wouldn’t you? Rich people wont reform the system to their financial disadvantage – it’s a case of the fox in the hen house.

Mr Worstall your example is ridiculous. All corporations pay a tax on whats left over after they have paid out salaries and paid expenses. Its THEIR flow of income. If they then use their income to create a flow of income to someone else then that person pays a tax on THEIR flow of income. Thats how it works and how it SHOULD work.

In any case, corporate taxes are not a tax on personal income, they are the price investors pay to avoid liability if their cash cows hurt somebody. If they had to go in as partners, or as proprietors, and their company killed an employee or poisoned a town’s water supply, those who got hurt could come and take away all their assets — other investments, their house, their car. We want to encourage investment, so we create limited liability entities, but that protection doesn’t come completely free.

Furthermore, let’s look at equities: let’s assume a typical Mkt_Cap/EBT ratio is ~15x. Then for every $1 of additional pretax earnings, the corporation pays $0.35 (less any deductions as many people point out). But this $1 of earnings has created $15 capital gains in the system so, if those are realized, current year IRS receipts will be $15*15%+$1*35% = $2.60 on a value creation of $15. That’s 17.3%. Now it’s true that the market value should only move up by $15 if the $1 increase in earnings is expected to be maintained in perpetuity. If it is, the IRS will get a future corporate tax stream; if it isn’t, the price will crash back down and someone will take an offsetting capital loss. But the fact still remains that some investors made $15 in the current year and the treasury only got 17.3% of that even if the corporation paid the full corporate tax rate (which they don’t). So the simple adding of percentages is incorrect.