So writeth Jane Galt (not the first time she's clamored for this).

While undoubtedly the discovery that most of the tax burden falls on employees will be for some a strike against the tax, and for others a sign that we need some stiff laws to force those corporations to place the burden elsewhere, it seems to me that this piece of information makes the corporate income tax no less attractive than it was before--which is to say, not at all. Levying a corporate income tax is a very inefficient way to do what we want, which is to redistribute money from the company's richer owners, customers, and managers to its poorer employees.

(All right, maybe we don't all want to do this; no doubt many of my readers are even now cringing in horror at the thought. But let us posit, for the sake of discussion, that we do want to do this, because that is at heart of all the arguments I have ever heard in favour of the corporate income tax, and even assuming the ends, the means make no sense.)

I agree. The corporate income tax is nuts, and arguments for it are born purely of economic ignorance.

The problem with her analysis is that the proposed purpose of the tax is to simply redistribute the money from the rich owners, customers, and managers to the employees is only the publicly acknowledged purpose of the tax. The real purpose of having a tax on a corporation is that it is a way for the federal government to get a significant amount of money with only a relatively small percentage of people understanding the scale of the money taken. By taxing corporations only investors, company accountants, and executives actually see the money being taken away, while the majority of the employees never see this occuring (nor do they typically care because it is "the corporation's money not mine", which is another bit of ignorance not unrelated to the problem). Though, converting this tax to an income tax would be readily recognized, and the percentages known to be unfair.

Looked at this way, the ends and the means make complete sense. The government just wants more money, with few people complaining about it.

No, by taxing corporations, you drive up the cost of their products. To corporations, taxes are just another cost of doing business (like energy, raw materials, labor, etc.) that gets factored into the costs of their goods and services. This drives up prices for consumers and makes American made good and services more expensive in comparison to countries where corporations aren't taxed. To the politicians, taxing corporations satisfies the "Soak the rich" mantra with the added benefit of being a stealthy reason behind price increases. When the prices go up, it gives the politicians more ammo to fire at the "greedy corporations".

Tim hits the nail on the head. But to put it more simply, the government hided taxes so that the people who pay them don't know how much they pay.

Corporate income tax is just one of the many misdirection plays which seem to work on the populace at large.

Hmmm...is a corporate income tax really an indirect consumption tax?