Monday, April 09, 2007

History of Corporate Income Tax, People Pay Taxes

Even before the personal income tax started in 1913, corporate income was taxed starting in 1909, at an initial rate of only 1% on income over $5,000, equivalent in today's dollars to about $113,000 of tax-exempt business income.

Until 1931, some amount of corporate income was tax-exempt - $2,000 or $3,000 in most years, equivalent in today's dollars to $45,000-$68,000 of non-taxable income. By 1932, tax-exempt corporate income was eliminated forever, and all business income gets taxed, starting with the first dollar of income. Also, by 1932 the corporate tax rate was up to 13.75%, having been increased gradually over the years from its original 1% level in 1909.

Myth: Corporations pay taxes.

Reality: Corporations really don't pay any taxes at all; people pay all taxes, in our roles as customers, workers and shareholders. In other words, higher taxes on corporations mean either higher prices for a corporation's customers, lower wages for its workers, or lower dividends for its shareholders, or all three.

1 Comments:

At 4/09/2007 2:13 PM, Blogger Izinha e Fred said...

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