Democrats wail about the new tax law.  The ever nuanced Nancy Pelosi even calls it "Armageddon" (short video).  Rather than taking less from taxpayers, the Dems say tax cuts are "giveaways" to the rich.  But if our corporate income tax has the highest statutory rates in the industrialized world, even progressive Democrats ought to be able to see that as uncompetitive and a disadvantage.  Let's take a brief look at the history of federal corporate income tax revenues.

In "Table 2.1 – RECEIPTS BY SOURCE: 1934–2022" (page 33 of the PDF), one sees that in seven of the ten years from 1934 through 1943, revenue from corporate income taxes was higher than revenue from individual income taxes.  But since 1944, corporate income taxes have always produced less revenue than individual income taxes, and the difference between the two has grown markedly.  The most revenue ever produced by the corporate income tax was 2007's $370B.

The first year that individual income tax revenue topped $1T was 2000, and in that year, the corporate income tax produced $207B, or 20.6 percent of the revenue from individual income taxes.  The last finalized year on Table 2.1 is 2016, when individual income tax revenues were $1,546B (the most ever) and corporate income tax revenues were $299B, or 19.3 percent of individual income taxes.

One might think that having the highest statutory rates for corporate income on the planet would redound to more revenue.  One might also be puzzled that there's not more revenue from corporations since their effective rates are higher than those for individuals (24-28 percent compared to 10 percent or below).

It's been said that corporations don't pay taxes; corporations collect taxes.  Whether you buy a corporation's products, work for a corporation, or own a corporation via stocks, you're the one paying corporate income taxes through higher prices, lower wages, and lower dividends.  Also, when dividends are distributed, the corporate income tax is "double-taxation."  So why not just end the corporate income tax and make America a truly great place to do business?

The snag in ending the corporate income tax is that $299B or so in revenue that corporations are coughing up each year.  How do you make up for it?  One way would be to shift the liability over to the individual income taxpayer.  And since individuals would no longer be paying the corporate income tax through higher prices, lower wages, and lower dividend checks, they could afford to pay higher individual income taxes.  However, such a shift should be gradual, or there could be revenue shortfalls.  When it comes to economic growth, the most important tax rate cut in the new law is the one for corporations.

In "The Next Step in Tax Reform Is Tax Repair" on Dec. 28 at Bloomberg View, Noah Smith admits that the new tax law "has a number of good things in it," which he itemizes in his first paragraph.  One of these, he opines, is the corporate tax rate cut.  But then in the second paragraph, Smith writes that "overall, the tax bill is a mess."  He worries about loopholes, "perverse incentives," and especially the new treatment of pass-through entities, like S corporations, that pay taxes through the individual income tax.

If one thinks the corporate income tax (what C corporations pay) should end and be shifted over to the individual (see above), then one might think Smith's critique of the new treatment of S corporations is quite valid.  Smith's article is worth reading not because all of his positions will please, but because he lays them out in a reasonable manner.  And there's no hyperventilating about Armageddon.  You will find it stimulating to see where Smith's right and where he misses the mark.

One thing Smith gets right is his concern about the deficit.  Even so, the projected uptick in the deficit over the next decade due to the new tax law is about the same as the actual deficit in 2009 ($1.4T), which was followed by additional trillion-dollar deficits, thanks to the Democrats.

In "America Needs a Balanced-Budget Amendment More Than Ever" on Jan. 3 at National Review, George Will wrote an article that should be read by those joyfully delirious about the new tax cuts.  He urges Congress to "promptly" send to the states an amendment to the Constitution that requires Congress to run balanced budgets.  Will's appreciation of the Constitution is refreshing:

Because reverence for the Constitution is imperiled by tinkering with it, and because the supply of ideas for improving Madison's document always exceed society's supply of Madisonian wisdom, the document should be amended rarely and reluctantly.  Today, however, a balanced-budget amendment is required to counter two developments: the abandonment of the original understanding of the Constitution[] and the death of the political morality that expressed that understanding.

Mr. Will's short article is a must-read.  And we should all hope that his balanced budget amendment gets rolling soon.  But Congress can begin moving toward fiscal responsibility today, even without an amendment.  Congress can, if it just will, start spending less.

Republicans who care about the deficit will now get serious about spending cuts.  But since about 70 percent of the federal budget is transfer payments, consisting of entitlements, welfare, and other checks to individuals, the GOP should expect little to no help from Democrats.  But fraud in EITC, Medicaid, and Medicare might garner some across-the-aisle support.  We can do something about fraud, can't we?

If Republicans embark on a program of spending cuts, some Americans would appreciate it more than the tax cuts.  Since the new law killed Obamacare's individual mandate (bravo!), Congress could save a little money by firing the 16,000 IRS agents hired to enforce the mandate.  Hey, it's a start.

By cutting spending, Republicans will help the new tax law work, and they might even make themselves look a little better in the process.

Jon N. Hall of Ultracon Opinion is a programmer/analyst from Kansas City.