Companies' Fair Share: Zero Percent

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”'(The following article originally appeared in the February 20, 2007 edition of TCSDaily.com.)”’

Conventional wisdom on taxes these days is that good taxes are progressive taxes. The more we earn, the higher our tax rate should be. And for nearly a century that logic has been etched into federal tax law, with progressive income tax rates rising along with Americans’ rising incomes.

The usual justification for those graduated rates isn’t that they raise more money. It’s that they’re “fair.” And what do we mean by that?

Ask an economist and she’ll tell you there are two basic approaches to tax fairness. One is “benefits received” which says taxes are fair if those who use the most government pay the most taxes. The other is “ability to pay” which says to forget how much government we use

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