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Inequalities in the Corporate Tax Code

Some industries are more equal than others:

I am at a loss to understand why the tax system should favor utilities, mining (which includes energy extraction), and leasing, while hitting services, construction, and wholesale and retail trade so hard. Why should the average retailer pay 31%, while the average utility pays only 14%?

These disparities are unfair and economically costly. Investors recognize these differences and allocate their capital accordingly. More capital flows to industries on the left side of the chart and less to those on the right. Far better would be a system in which investors deployed their capital based on economic fundamentals, not the distortions of the tax system.

I doubt this is actually part of a plan; our political class isn’t that smart. ┬áBut it doesn’t make it any less damaging.

Posted in Culture.