Friedman-Reich FAQ > Friedman-Reich > If corporations don't pay tax will the government lose money?
Ending double taxation does not mean the government loses revenue. Because corporations are artificial entities, any tax they pay on profits comes from somewhere: higher relative prices paid by consumers, lower wages, or less profit distributed to the owners (shareholders). In other words, individuals are paying this tax presently.
Most corporations and businesses–-such as sole proprietorships, LLCs, LLPs, and S-Corps–-are taxed at only the owner level. This program addresses the other types, mostly C-Corps, that are likely to be in 401(k), IRA, 529, and other savings plans. Note these are also likely to be ones “too big to fail” and which are bringing down the economy.
By ending corporate double taxation, we can eliminate subsidies and tax credits (why would they be needed if there is no corporate tax?), and can justify ending bailouts and fiscal stimuli. All these would be net decreases in government spending or increases in revenue without affecting services.
Note also that the captial gains tax will no longer be necessary as all taxes will be paid at the normal individual rates. Capital gains are favored shelters today and used extensively by hedge funds to shield their profits.
Further, because capital markets and savings and investment will be revitalized, we suspect government will end up with more revenue from a growing economy.
This could be the mother of all stimuli!