A week ago, after the South Carolina primary, I wanted to write a little piece called “Anarchists for Newt.” Too late, sadly.

I can’t take this race seriously, although I follow it compulsively.

I wish Gingrich could have held on. A general election between Obama and Romney will be like being trapped in a focus group for six months. What do you want to hear? OK. How about this. Can you rate the following statement on a scale of one to ten…

The proles are up in arms (I wish literally) over Romney’s effective tax rate of 13.9%. Let’s review the facts:

Romney benefits from being taxed at the current capital gains rate of 15%. That’s a sweet rate compared to the highest rate paid on earned income of 35%. The conservative argument is that low rates on capital gains spur investment. This argument has some validity for those who would benefit from a one-off or infrequent return on a significant gain, such as the sale of a business. A high rate of tax on the sale of a business asset reduces the likelihood that an investor would be willing to sell if the tax rate diminishes the potential return of the transaction (especially when the transaction eliminates future material gains through ordinary profit from the business). That’s a pretty good argument, but it doesn’t mean anything to the likes of Romney and his cohort.

Sales of business income-producing assets that will produce a short-term gain are major decisions for a small business owner that has invested years of his or her life building up the business. Say you own a moderately successful coffee shop and one of the big corporate entities want to buy you out. If you can cash in and pay a nominal rate on the gain, it might make sense. If you have to pay a third of the gain on your lifetime investment, you might just hold on to your inefficient little neighborhood store and keep working 80 hours a week to keep it in business instead.

What does that have to do with the likes of Romney? Not a thing. Since he received “fees” from other rich people and re-invested the gains from the private capital that he “managed” he never had any of the risk of loss of income that the average small business owner must consider when making this decision.

The argument that without a low rate of tax on capital gains money would no longer be invested is just wrong. What the hell else are rich people going to do with their money? Stuff it in giant mattresses? Small business owners would need a break though if the rate were to get jacked up.

Earlier I argued that corporate income tax should be eliminated. I still stand by that argument. Recently I saw that some were claiming that Romney’s real rate was more like 50% since his income was from corporations (taxed at a fixed rate of 35%) plus his capital gains rate of 15%. That’s just pure bullshit. Although corporations do pay a current rate of 35%, few of them pay any dividends anyway, so what difference does it make? I doubt that the bulk of Romney’s earnings were from dividends (although there might be a few insignificant millions of dollars of dividends in the mix). Corporations have innumerable ways to avoid generating taxable profits, not least of which is off-shoring their most profitable divisions in low-tax countries such as Ireland.

Here’s a good trade-off: Eliminate corporate income tax altogether, but require that all profits be distributed (less prudent reserves) and be taxed as ordinary income.

(As an aside, whatever the rate on corporations, I don’t feel sorry for them. There are a wide variety of benefits available to both shareholders and employees of C-Corps that are not available to sole proprietors or even S-Corps. Not to mention the fact that even medium-sized corporations are usually at a huge advantage (vis a vis regulations and taxation) over their start-up rivals.)

Finally, from a moral perspective, is the sweat of one’s brow worth less than that pile of cash your daddy gave you? Just wondering.

Oh, and by the way, I’m still an anarchist and think all taxes are bullshit and serve only to sustain a governing elite, but that’s beside the point.

Corporations are persons etc… Well, we leftist sorts don’t like that. I have a bit of knowledge about taxes and I suggest that it might be a good idea to eliminate corporate income taxes altogether in furtherance of the notion that a corporation, being not a person, ought not to be earning income.

So, contra Mr. Huntsman, I suggest we eliminate income tax on corporations completely. However, the trade-0ff would be that all capital gains income (and dividends) be taxed as ordinary income. No more double taxation. No more corporate gyrations to reduce their tax burden. Just tax the income that goes to real persons.

Your thoughts?