01:00 AM EST on Sunday, December 5, 2004

Corporate-income taxes -- local, state or federal -- are absurd, and should be abolished. I say that as we come out of a political season in which some politicians said that they wanted "corporations to finally pay their fair share" of government expenses, and that it's outrageous that corporations are "getting away with murder," by paying a smaller percentage than "hard-working Americans."

But the "corporate-income" tax is actually paid by plenty of "hard-working people": the employees of the taxed company; the company's customers, to whom the costs of the tax are passed on, in the price of goods and services; and, of course, the investors who help start and expand companies.

(In America, some of the impetus to tax corporations stems from the terrible 1886 Supreme Court ruling Santa Clara v. Southern Pacific Railroad, in which corporations were first recognized as legal "persons." Boy, has that caused a lot of mischief!)

Saying that "the government" should do this or "rich corporations" should do that is a self-delusion or, for politicians, a diversion for public consumption for people loath to face the awkward fact that the government and corporations are, in the end, just made up of fallible people. When you tax corporations, you tax people.

And in remarkably inefficient ways. The corporate-income tax is even more complicated than the sick joke known as the personal-income tax. It diverts companies' economic decision making from work that would energize them and expand the general economy (although it does enrich lawyers and accountants); it wastes corporate money in uneconomic activities that could otherwise go into scientific breakthroughs, inventions and better marketing and distribution; and it taxes income twice, which discourages investment.

There is a vast loss to society and the economy in trying to game the tax code through expensive professional advice and winning favors from local, state and federal officials, or candidates for public office.

And the corporate-tax code is even more vulnerable to the corrupting influence of K Street lobbyists and dubious campaign contributions than is the personal-income tax.

Meanwhile, other countries are cutting or eliminating their corporate-income taxes -- providing even more of an incentive for U.S. companies to move offshore.

If the United States were to do the same, then, I think, total tax revenues would rise, because the economy would be re-energized, with less of it skimmed off in astronomically expensive billable hours with accountants and lawyers.

Railing at corporations to pay more taxes is easy, because most people don't think the issue through -- any more than they think through the assertion "Don't worry, the government will pay for it," which presents "the government" as a sort of disembodied source of free money. We are the government.

There are many public needs in America that must be addressed: poor infrastructure (our roads are becoming Third World, our public transportation close to nonexistent); our many bad schools; the worst health-care system in the West; and so on. The way to pay for them is to boost the taxes of people -- especially rich people -- as simply and honestly as possible, and to remove the vine-encrusted layers of inefficiency of our mangrove swamp of a tax code, including such creatures as the "corporate-income tax."

If some people at a corporation (executives, et al.) make a lot of money, then tax them -- not the company's bogus legal "personhood."

Robert Whitcomb is The Providence Journal's editorial-page editor.