The Atlantic, Why We Should Eliminate the Corporate Income Tax, by Megan McArdle:

The FT has a piece today on the administration’s plans to lower the corporate income tax rate in exchange for simplification–getting rid of a bunch of deductions.  This is a decent plan–and not just because it’s the Full Employment for Policy Pundits Act of 2011–but this seems like a good time to once again charge into the fray and argue that we ought to just eliminate the damn thing altogether.

I can practically hear my more leftish readers grinding their teeth as they prepare to unload a wagonful of vitriol, but my objectives here are as much liberal as they are conservative.  The corporate income tax is an extraordinarily clumsy vehicle for the social purposes it is supposed to serve–it doesn’t raise that much revenue, and it doesn’t necessarily fall most heavily on the rich.  There are better ways to serve its progressive goals, at least as I see them–to reallocate income from capital to labor, and from rich to poor.

Why do I say this?  Well, I’ve been over all this before, many times, but for new readers, it’s worth rehearsing the arguments:

• You can’t tax a corporation; you can only tax a person
• The incidence of “corporate” taxes is not necessarily progressive
• The corporate income tax encourages firms to use debt finance, rather than equity
• You can’t eliminate all the loopholes
• The corporate income tax encourages firms to waste resources on tax avoidance
• If we get rid of the corporate income tax, we could eliminate the special treatment for dividends and capital gains
• There are already substantial disincentives to shelter your income in a corporation
• The corporate income tax doesn’t raise that much money
• Without the corporate income tax, a lot of the incentive for lobbying would go away

Update: Dan Shaviro (NYU), Megan McArdle Needs a Tax Primer