Sinclair says:

"The second argument ... recognises that taxation distorts the economy. Consequently, to minimise these distortions it is necessary to tax everything. Joel Slemrod refers to this as being a “folk theorem”."

Sinclair presents no evidence that taxation distorts the economy.

To describe the Haig-Simons model as folk theorem without raising or even engaging the arguments is sophistry.

Haig-Simons treats all gains as income. Any deviations from this benchmark are tax expenditures.

Treasury's yearly tax expenditure statement shows we use the tax system to give grants of about $60 bn per annum to various rent seekers. $30 bn is superannaution concessions, which as a generalisation benefit well off and middle class people and the funds of which they are members. On efficiency and equity grounds arguably all of that could be re-directed to pensions.

Sinclair argues there is no real justification for companies to pay tax. Companies are artifical legal constructs who have separate legal existence from their shareholders and management. This corporate veil protects the people behind the company from others seeking retribution for their commercial actions. Thus a company is to some extent a risk protection arrangement. This protection society gives is something that companies should pay society for, eg through taxes.

This artifical creation exists because of societal complicity or agreement. The deal is "You can make profits if some are taxed."

The legal fiction of separateness seems to require separate taxation, unless there are compelling reasons not to do so. There are arguable reasons, but not compelling ones. Indeed if equity is a principle for judging tax sytems then a democratic society requires companies to pay tax.

The actual incidence of company tax (ie who bears it ultimately) is a debateable question, dependent on a range of factors. It can be the company, the shareholders, consumers, staff, and so on, or a mix of all, with impacts on prices, wages, dividends, the capital accumulation process and so on.

Since not all profit is distributed to shareholders, then taxing companies makes some sense because this happens before distribution occurs (ie before re-investment or dividend distribution occurs.)

The centre for independent studies should be more appropriately re-named "The centre for neo-conservative horsesh!t.