President Reagan suggested today that he might favor abolishing the corporate income tax, saying it is "very hard to justify its existence."
Speaking off the cuff to a group of industry executives at the Millipore Corp. here, Reagan indicated that he thinks the corporate income tax amounts to double taxation of corporate profits: the government taxes them once at the corporate level, a second time when they are paid out to individuals as dividends.
Conservatives have made such arguments for years, saying the corporate tax either forces up prices or unfairly burdens investment. Defenders of the tax reply that corporations make money--often large amounts of it--and should pay their fair share. Estimated corporate income tax receipts this year are about $65 billion.
Reagan's remarks were in response to appeals from several executives of high-technology companies here, who said they need both tax relief and more government help in promoting exports.
"I realize that there will be a great stirring and I will probably kick myself for having said this," Reagan said. "But when are we all going to have the courage to point out that, in our tax structure, the corporate tax is very hard to justify its existence?
"Why isn't the so-called 'corporate tax' simply passed on to the stockholders in which they then, based on whatever bracket they are in, will pay an individual income tax?" Reagan asked the executives.
Questioned by reporters later whether he would make such a proposal, Reagan said, "I said it was something we ought to look at because there isn't really a justification for it." A White House spokesman said tonight that "we're not seriously considering" the idea.
Reagan's comments came at the end of a series of appearances at high-technology firms designed both to show that he is concerned with the jobs issue and the unemployed and to underscore his new theme that "structural" problems in the economy are at the heart of the nation's 10.8 percent unemployment rate.
His comments came one day after he announced in his State of the Union address that he would ask Congress for a standby tax increase in later years that would include the equivalent of a 1 percent surcharge on individual and corporate taxable income.
The president said abolition of the corporate income tax would help not only individual investors but also colleges, universities and such other institutions as labor unions that invest their endowments or pension funds in corporations.
"Those are supposed to be tax-free institutions and much of their endowment is invested out there in industrial America," Reagan said. "But if they are tax free--aren't they paying a 46 percent tax rate before they get . . . the dividends they get from the holdings that they have?
"It wouldn't be a loss to the government," Reagan also maintained. He did not explain, except to say "I think it would be a net gain to the government all the way around if we would look at that instead of sticking with what is literally a myth about corporations and what the taxing policy should be."
The president has already won substantial tax cuts for corporations in the 1981 tax bill, although some were repealed last summer.
The underlying theme of Reagan's afternoon visits to two high-technology companies and a job training center was that the nation's economic difficulties are the result of long-term deterioration in "smokestack" industries and the rise of computers and new technology.
"This is the future and you're part of it," the president told workers making computer keyboards at a Digital Equipment Corp. plant in Roxbury, a depressed Boston area.
Later, Reagan declared that the country is "in a great transition" period to high technology, causing job dislocation.
The president's trip today was also designed to show him with groups that polls indicate are disaffected with his policy. He lifted a draft beer from the bar in a blue-collar working class suburb in Dorchester, and he talked to minority job trainees who were studying computer programming.