What is a fair corporate tax? It’s a hot political topic, but one loaded with a tremendous amount of mis-information. On the left, it’s common to cite “loopholes” which allow corporations to “offshore” profits and dodge taxes as a result of corporate lobbying. On the right, the extremely high corporate tax rate of 38%, nearly double the worldwide average, is cited as a major problem.

Both statements are greatly limited at best. US corporate tax law does not contain “loopholes” but a series of structural deficiencies derived primarily from being hopelessly antiquated. Any discussion of the tax rate misses the main issues entirely, as the definition of “profit” – more accurately, definition of “income” and “expense” – is the core issue.

Any reasonable discussion of corporate taxes has to start with the fundamentals. What is a corporation? What is profit? Who benefits? What needs to be done?

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