Changing the Way We Tax All Businesses: The Case for Rational Uniformity

Abstract

The article argues for a single type of tax structure for all businesses, whether a corporation, a partnership, or sole proprietorship, whether large or small, and whether or not they derive their income from services or capital or both.

The leading studies on how we should tax business have proposed separate and quite different structures for public and private businesses. This article discusses the inequities and complexities generated by these disparate proposals and instead focuses on the benefits of a single regime somewhat similar to some consumption tax proposals, combining some (but hardly all) features of the Flat Tax and the USA Tax, without the narrow bases of most Value Added Taxes.

My proposal is more consistent with the tax structure of other developed countries and would enable us to compete more favorably with our major trading partners. Moreover, it would allow small businesses to participate with our major corporations in global trading, in both the emerging technology services and capital sectors.

By eliminating the outdated and hypertechnical partnership tax structure and by extending the proposals to integrate the corporate and individual tax, we achieve a more rational and efficient taxation of business income.