Kilroy Was Here
January 07, 2003
Paul Krugman on Double Taxation
Today's New York Times Paul Krugman article also wonders about double taxation:
Above all, [the White House economic stimulus plan is] supposed to end the evil of "double taxation."
Now lots of income faces double taxation, in the sense that the same dollar gets taxed more than once along the way. For example, most of us pay income and payroll taxes when we earn our salary, then pay sales taxes when we spend it. So why has it suddenly become urgent to ensure that dividends, in particular, never be taxed more than once?
That is, if they're taxed at all. In practice, the Bush plan would exempt a lot of income — rich people's income — from all taxes. Thanks to the efforts of lobbyists, today's corporate tax code has as many holes in it as a piece of Swiss cheese, and today's corporations take full advantage. Case in point: Between 1998 and 2001 CSX Corporation, the company run by the incoming Treasury secretary, John Snow, made $900 million in profits, but paid no net taxes — in fact, it received $164 million in rebates. This wasn't exceptional; the average tax rate on profits has fallen to a nearly 60-year low.
Anyway, even to debate the pros and cons of dividend taxation is to play the administration's game, which is to change the subject. Weren't we supposed to be talking about emergency economic stimulus?
Good question, Paul.
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