The Best Way to Break Up Mega-Corporations: Progressive Taxes
In fact, the truth is even more weird. The bigger a corporation, the more lawyers and accountants they can hire in order to perform tax wizardry, apply for tax breaks, and thus lower their effective tax rate. Net result: large corporations on average pay only 9% of their profits in taxes.
The argument for flat corporate-taxes is simple. If you impose progressive taxes for corporations, they will just split themselves into many smaller corporations, in order to reduce their tax bill. Instead of one business with $1B in revenues, you will have 10 businesses each with $100M in revenues. And merely through the act of splitting themselves up, they will accumulate significant tax savings.
Free markets are the greatest economic system we have ever found, and free markets work best when there is lots of competition. Hence why mega-corporations are completely antithetical to a free market economy. Anything we can do to break up large corporations into smaller companies would make the world a better place.
This is exactly why antitrust legislation originated a century ago. Unfortunately, antitrust regulators have been handed an unsolvable problem. They are trying to play whack-a-mole with a far richer adversary who can always find new ingenious ways to get around specific provisions in antitrust legislation.
