handleman,
Absolutely not. The economic multiplier of money in the hands of companies varies between 5 and 8 (i.e., a $100 in company profit will generate between $500 and $800 in new W-2 income). Money in the hands of government has a 1.5-4 multiplier. Bottom line is that the Treasury gets less money because of corporate income tax than they would get if they abolished it.
You might ask "then why does corporate income tax exist if the economics are that bad?" Glad you asked. Corporate income tax exists because the Congress wants to have a lever to pull to "direct" the economy. One of the (very very few) examples of this being successful is the Section 29 tax credits that were part of the obscene "Windfall Profits Tax". The Section 29 tax credits gave the Oil & Gas industry a tax credit (i.e., a direct deduction from their taxes rather than from their income) for money spent on developing unconventional fuel. At the time, the industry knew that coalbed methane (CBM) existed, and many coal seams had significant gas in them, but we also knew that the CO2 was way too high for cryo plants and that CBM produced way too much water to be economic. We would have to invest hundreds of billions of dollars to create the infrastructure to produce this stuff, and at $0.90/MMSCF there was never a payout. The Section 29 tax credits created that economic payout and CBM was developed. If the story stopped there, it would be a success, but a minor league success. To produce the CBM we had to basically create a new way of thinking about production and reservoir flow. These new ways of doing stuff made shale gas and shale oil possible (without new tax breaks), and Shale has turned the U.S. from exporting $500 billion/day to purchase foreign oil to exporting oil--THE major factor in the country's economic recovery.
Section 29 tax credits were a way for the government to incentivize companies to do something that was in the country's interest, but that looked like bad economics and had a really bad risk/reward profile. There are thousands of examples of Congress pulling wrong levers ("Cash for Clunkers", Solyndra, etc.), but without corporate income tax they don't have any levers to pull.
A corporation is a legal document. Period. If the corporation has "excess profits" whatever that means to you then what can they do with them? They can pay dividends (that are taxable to the recipient). They can increase their payroll (taxable to the recipient). They can invest in new stuff (which creates transactions that require people to do work for which they are paid and taxed). The economics of corporate income tax just don't hold water.
[bold]David Simpson, PE[/bold]
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist