Monday, August 25, 2014

Cutting the Corporate Tax Would Grow Other Problems

Jared Bernstein, NYT
AUG. 25, 2014

The current debate over corporate inversions, in which American companies like Burger King consider renouncing their citizenship for tax-reduction purposes, is only the latest reminder that the United States corporate tax code has deep problems.

Ideas for reforming the business side of the tax code abound, but there are those on both the left and the right who argue that it cannot be salvaged and should simply be abolished. N. Gregory Mankiw made the argument from the right on Sunday in The Times.

The basic idea behind abolition is that the current corporate tax code is fraught with wasteful loopholes — each of which has politically power defenders — that both lose revenue and distort business decisions. The abolitionists ask: Why not give up on the fiction that we can adequately and efficiently tax companies and instead tax their shareholders at higher income-tax rates?

(More here.)

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