Tax Policy

In 2007, the most recent year for which statistics are available for both individuals and corporations, total corporate income tax liability was $413.2 million and total individual income tax liability was $5.6 billion.
The huge disparity between individual and corporate taxes results from the different ways in which the two groups are taxed.
Individuals pay taxes on all of there income. They can make deductions for mortgage interest, medical expenses, and a few other types of expenses, but in general, they pay taxes on everything. Basic costs of living, such as housing, food, and transportation are non-deductible. Corporations pay tax on their net income, after they deduct all of the expenses of doing business.
If a corporation requires vehicles to conduct its business, all of that expense is deductible. If an individual requires a vehicle to go to work, they pay tax on all of the income used to fund that expense.
If a corporation operates from offices, factories, or warehouses, their costs to purchase and maintain those buildings are deductible.
If a corporate employee needs to stay in a motel or rent an apartment, those costs are deductible. If an individual lives in a house, they pay taxes on the income that they pay their rent or mortgage principal with. If a corporation buys food or liquor for a party or company event, those costs are deductible. If an individual buys food for their family, they pay tax on the income used to buy that food.
Aside from the extremely different tax rules that apply to corporate and individual income, corporations and individuals are also taxed at different rates.
Corporations pay 6.6% tax on their net income.
Individuals pay taxes on their entire income on the following progressive scale:
$2850 – 5%
$7150 – 7%
Over $7150 – 9%
The “effective tax rate” for taxable income, which is total income minus deductions, is 7.5% on average for all individuals. Individuals at roughly the $40,000 dollar income level pay a higher percentage of their income in taxes than corporations, and those rates continue to go up the more they make.
Individuals pay 13.5 times as much in income tax as corporations. To put this another way, the people who do the work pay 13.5 times as much to maintain government as the shareholders who produce nothing, but collect the profits. This is because the shareholder, who produces nothing, is taxed at a lower rate, and has a completely different set of tax rules, which shield most of their income from taxation.
Basic fairness would dictate that all individuals be taxed according to the same laws. A corporation is only a collection of individuals. A corporation is its shareholders. Shareholders, through the State established legal fiction of corporation, work and do business according to a completely different set of rules than individuals, and their activities are taxed in an entirely different manner.
There are endless arguments about this issue, but if you step back and look at it objectively, it is really just a bit of gimmickry that clever people have invented in order to cheat others out of what is rightfully theirs. No matter how many legal arguments, statistics, and economic theories someone sights, they can never overcome the basic fact that in the end the result is two different sets of rules for the same supposedly equal people who are constitutionally entitled to equal treatment under the law.
If you read my piece on the history and ethics of taxation, then you will understand that this situation is a result of the basic law of taxation: the powerful tax the weak, and the rich tax the poor.