The modern corporate tax was created over a century ago with fairness in mind – or more specifically, what tax scholars call the “benefits principle.” That is, a person or business should pay an amount of tax that is commensurate with the benefits received. For the middle part of the 20th century, companies were shouldering a large share of the burden of government – as much as 40% of all government revenue came from corporate taxes. And, of course, they’ve benefited enormously from the roads and schools the U.S. provides, not to mention rule of law and due process, writes Stephanie Leiser, an expert on tax policy at the University of Michigan.

Today, that burden has dropped to about 7%, while individual income taxes cover nearly half the government tab. President Joe Biden is asking companies to pay a little more in taxes to finance his $2 trillion infrastructure plan to shore up the country’s transportation, electrical grid and much else.

Leiser explains how Biden’s plan – which would benefit corporations a great deal – reflects the benefits principle today.

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Bryan Keogh

Senior Editor, Economy + Business

Biden is asking companies to cover the tab for his infrastructure plan. AP Photo/Evan Vucci

Biden wants corporations to pay for his $2 trillion infrastructure plan

Stephanie Leiser, University of Michigan

The corporate tax was created on the principle that people and companies should be taxed based on what they receive in benefits – and US corporations have received an awful lot.


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