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Posts Tagged ‘corporate tax’
January 17th, 2018 at 1:07 pm
Image of the Day: Myth Versus Fact Regarding Corporate Profits
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An instructive myth-versus-fact visual when it comes to public assumptions regarding corporate profits, courtesy of AEI:

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Myth Versus Fact:  Corporate Profits

Myth Versus Fact: Corporate Profits

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August 14th, 2017 at 11:45 am
Image of the Day: U.S. Trails on Corporate Tax Reform
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If you’re concerned about headwinds facing American international competitiveness, the first place to isolate and correct the problem is on corporate taxes.  Courtesy of the Senate Joint Economic Committee, this shows in disturbing relief not only how the U.S. maintains the developed world’s highest rate, but also how global competitors continue to move in the right direction and leave us in the dust:

Stagnant U.S. Corporate Tax Rate

Stagnant U.S. Corporate Tax Rate

The good news is that comprehensive tax reform efforts are getting underway on both ends of Pennsylvania Avenue.  It’s been three decades since we achieved significant reform under Ronald Reagan, and we mustn’t blow this golden opportunity.

May 8th, 2017 at 2:31 pm
New Poll: Americans Supportive of Trump Tax Proposals
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As we move forward on President Trump’s tax reform proposal, which we highlighted in our latest Liberty Update, there’s encouraging news to report.  According to Rasmussen Reports, Americans are so far supportive.

By a 46% to 32% margin, Americans support Trump’s proposal to repeal the unfair “death tax,” and by a 48% to 30% margin agree that tax cuts help the economy.  Voters are also receptive to the plan “to eliminate most income tax deductions in exchange for a higher standard deduction,” which will simplify the code and benefit Americans in the lower filing brackets.

So there’s popular momentum, and now it’s up to Congress to finally get this done.

May 4th, 2017 at 12:09 pm
Melloan: High U.S. Corporate Tax Rate Has Undermined Our Economic Dominance
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This week, we highlight how Donald Trump’s new tax outline offers a remarkably excellent framework for reigniting our economy, increasing prosperity for all Americans and making the U.S. more globally competitive.

Among other things, we note how the U.S. continues to suffer the industrialized world’s highest corporate tax rate, which Trump proposes to slash from 35% to 15%, better than the developed world average of about 25%.  In The Wall Street Journal, former deputy editor and global affairs expert George Melloan observes how our unsustainably high corporate rate has slowly eroded America’s former economic dominance:

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The slow economic growth in the U.S. over the past decade has resulted not from what the world has done to America but what America has done to itself, according to a Council on Foreign Relations study “How America Stacks Up.”  It says that the U.S. ‘depends far more on the global economy than it did two decades ago, and international trade and foreign investment are increasingly vital to the U.S.’  It also finds that while the U.S. national economy remains by far the world’s dominant one, it has grown less so over that period.

One big reason is that ‘though the United States once had among the lowest corporate tax rates in the industrialized world it now has the highest.’  As the study confirms and Republican  tax reformers in Congress understand, those high rates are not big revenue producers because multinationals choose not to bring home their overseas earnings for the IRS to grab.”

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This captures again how critical it is that we finally achieve major tax reform for the first time since Ronald Reagan’s presidency, and stop the slow erosion of economic superiority that our crippling corporate tax code has caused.

November 8th, 2016 at 11:35 am
Good News, Regardless of Election Outcome: Tax Relief Likely
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Regardless of today’s election outcome, here’s an encouraging headline buried deep on Page C 8 of this morning’s Wall Street Journal:  “Tax Relief Is Likely No Matter Who Wins.”

As we at CFIF have long emphasized, the U.S. continues to suffer the developed world’s highest corporate tax rate.  In addition to suffocating domestic growth and imposing needless tax complexity on American businesses, our outdated corporate tax code also explains why corporations are forced to relocate headquarters overseas in order to survive in an increasingly competitive global marketplace.  Speaker Paul Ryan has unsurprisingly offered admirable intellectual and political leadership in promoting reform, and the good news is that oven liberals like Barack Obama understand the need for cutting rates and reducing complexity.

Accordingly, it’s refreshing regardless of one’s political leanings to read the Journal’s take:

No matter the outcome of Tuesday’s election, American companies with substantial overseas earnings, and their investors, could emerge as big winners.  Corporate tax reform that would make it easier for U.S. firms to repatriate foreign earnings has emerged as a rare issue of bipartisan consensus in Washington.  Progress on this issue is possible no matter who controls the White House and Congress next year…  Under current law, American companies with overseas earnings pay no U.S. federal tax on these profits unless and until they repatriate the money, at which time they pay the relatively high corporate tax rate of 35%.  This creates a perverse incentive for U.S. companies to house money abroad rather than reinvest it at home…

Even in a divided-government scenario, for example, with Mrs. Clinton as President and a Republican-controlled Congress, it seems likely that companies can look forward to a one-time break on repatriated earnings and a lower tax rate going forward.”

And as the Journal notes, the positive effect would likely be substantial:

The last time there was such a repatriation tax holiday was in a law passed in 2004, and the effects were dramatic.  Companies brought home $299 billion of overseas earnings in 2005, up from $82 billion the previous year, according to the Bureau of Economic Analysis.”

Far preferable to a mere one-time repatriation tax holiday would be a permanent reduction in the corporate tax rate below the developed worldwide average around 20%, and removal of Byzantine complexity.  Regardless, the likelihood of tax reform whoever wins tonight offers welcome news as an oftentimes bleak election concludes.

October 19th, 2016 at 12:39 pm
In Tonight’s Debate, Voters Deserve to Hear More About Economic, Tax Policies
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Tonight, millions of Americans will tune into the final Presidential debate between Donald Trump and Hillary Clinton.  Among the central topics should be the economy, which recent polling shows remains voters’ foremost concern.

Unfortunately, voters haven’t heard enough from either candidate on that topic during the first two debates.

Which is tragic, because this election itself has taken a toll on the economy.  According to a recent poll of economists, rhetoric from both campaigns has had a negative impact on economic growth over the past few months.  Accordingly, rather than continuing to argue about personal issues and mutual animosities, both candidates must do a better job of improving economic optimism and confidence by advocating pro-growth policies that will help us proper.

And in that vein, perhaps no issue merits focus more than comprehensive tax reform.

During the first debate, taxes and potential plans received brief discussion.  Both candidates agreed that a significant problem exists with companies moving to other countries and protecting their earnings abroad from excessive U.S. taxes. Trump correctly pointed out that the reason many companies leave is that our corporate rate remains the highest in the developed world.  Indeed, a recent Mercatus Center study highlighted how the increasing number of corporate inversions result from that inglorious distinction, and how lowering the rate will go a long way toward keeping American companies here so that they can create jobs and generate tax revenues domestically rather than abroad.

But more discussion and detail is critical.  Over thirty years ago, on September 26, 1986, the Senate began debate over comprehensive tax reform legislation that the House of Representatives had approved.  Incredibly, our tax code has not been reformed in a meaningful manner during the ensuing 30 years despite tectonic evolution of the U.S. economy during that time period.  It’s therefore past time to modernize the code and reformed so as to help American businesses of all sizes, rather than continuing to hinder growth and opportunity.

And on that point, we need concrete plans from Mr. Trump and Secretary Clinton.

Demonstrating his own commendable leadership on this critical matter, Speaker of the House Paul Ryan recently stated that tax reform is his top priority in 2017.   He rightly explained that the first thing that needs to be accomplished next year is “a budget that gets tax reform, that gets this debt and deficit under control.”   Clearly, Speaker Ryan realizes that the American people welcome discussion about how the federal government can actually enact policies beneficial to the economy and their own individual finances.  Whoever enters the White House this coming January must work with Congress to reform our tax code as soon as possible, which is precisely why we need to hear their ideas on how to best accomplish that.

To his credit, Trump has proposed a tax reduction for all businesses from 35 percent to 15 percent.  And to her credit, Clinton acknowledges that lowering the corporate rate would encourage companies to repatriate funds stranded overseas.  That’s obviously a step in the right direction, but the American people need to hear more specifics – a simplified code and lower rate, in particular – and a timeline for when they plan to enact that type of reform.  While their rhetoric on the issue is occasionally encouraging, voters must learn which candidate will work to fix the tax code in order to improve our economy the fastest.

This election has obviously been among the most contentious in our nation’s history, and policy has too often taken a back seat to personality.  While that may at times provide shallow entertainment, it’s time to put the personal attacks aside and hear more about both candidates’ visions for the economy.  Hopefully, that will mean devoting more time toward discussing tax reform and economic growth, not bickering over issues that ultimately has little impact on Americans’ everyday lives and needs.

September 21st, 2016 at 12:45 pm
Image of the Day: The U.S. Suffers Developed World’s Highest Corporate Tax Rate
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Corporate inversions aren’t the problem, they’re the symptom.  The problem, as Mercatus Ceneter’s Veronique de Rugy explains, is that “America’s corporate income tax rate is the highest of all developed nations.”

High U.S. Corporate Tax Rate

High U.S. Corporate Tax Rate

As de Rugy correctly concludes, “Addressing the underlying causes of inversions by reforming this tax system would not only stop inversions, it would also trim the burden on corporations, which would in turn help American companies compete better at home and abroad.”

August 22nd, 2016 at 3:45 pm
Simple Illustration Explains Need for Corporate Tax Reform
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Inexplicably, the U.S. stubbornly maintains the developed world’s highest corporate tax rate.  We also hold the inglorious distinction of taxing income earned overseas a second time, even after taxes were already paid in the nations where it was earned.  Obviously, that only incentivize businesses to leave America for more hospitable foreign shores and take jobs with them.

A simple illustration courtesy of The Wall Street Journal drives home the point:

The U.S. system of worldwide taxation means that a company that moves from Dublin, Ohio to Dublin, Ireland, will pay a rate that is less than a third of America’s.  A dollar of profit earned on the Emerald Isle by an Irish-based company becomes 87.5 cents after taxes, which it can then invest in Ireland or the U.S. or somewhere else.  But if the company stays in Ohio and makes the same buck in Ireland, the after-tax return drops to 65 cents or less if the money is invested in America.”

When people wonder why over seven years of economic “recovery” doesn’t feel like a recovery at all, this is a leading reason.  Our unsustainably high rate and double-taxation regime is simply unacceptable, but the good news is that the coalition favoring reform is bipartisan.  That’s an encouraging sign regardless of who wins in November, but it’s time to finally get this done before even more businesses and jobs move overseas.

April 15th, 2016 at 8:22 am
Podcast: Corporate Inversions and Tax Reform
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In an interview with CFIF, Michi Iljazi, Communications and Policy Manager for the Taxpayers Protection Alliance (TPA), discusses so-called corporate inversions, what they are and why the outdated U.S. tax code must be reformed to cure the underlining problem, as well as TPA’s latest Tax Day video.

Listen to the interview here.

December 12th, 2014 at 3:10 pm
New Congress Provides Perfect Opportunity for Broad Corporate Tax Reform
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In a recent speech before the Business Roundtable, an association of top business leaders from the nation’s largest corporations, President Obama addressed a variety of issues, including the critical matter of tax policy.  To his credit, he acknowledged there is a “deal to be done” when it comes to corporate tax reform.

But as we’ve often noted, it is important that any deal with the new Congress involve comprehensive reform, rather than just a series of short-term fixes.

At a rate exceeding 39%, American companies are subject to the highest corporate income tax in the developed world, far higher than the developed nation average rate of 25%.  On top of that, our firms face the burden of being taxed twice on profits earned overseas.  Whereas every company in the world pays tax in the nation where it earns profits, American companies are then subject to an additional domestic tax on those profits when repatriated.  That punitive process, known as our “worldwide tax regime,” is practiced by virtually no other country on Earth.

And unfortunately, what we’ve done in the past to address the problem is akin to treating a bullet wound exclusively with painkillers.  In other words, we’ve addressed the symptoms, but not the problem.

For example, recall the Treasury Department’s counterproductive decision earlier this fall on the issue of corporate tax inversions, imposing punitive new rules.  Corporate tax inversions constitute a perfectly logical response to the flawed system under which our economy’s biggest drivers are forced to work – one that is outdated and anti-competitive.  The Treasury Department’s new inversion rules will only serve to hamper American firms already disadvantaged by our sky-high domestic tax rates, they will drive even more companies and employers abroad and they will retroactively punish them for making sound, logical, completely legal business decisions.  Additionally, they threaten job growth in some of our most important sectors, as American firms become less competitive globally.

As another example, Obama in his post-election comments expressed support for a corporate tax holiday.  Such a corporate tax holiday – or repatriation – would allow companies with profits overseas to bring them back to the United States at a reduced tax rate.  His underlying motive wasn’t common-sense reform so much as the belief that the revenues could then be used for federal infrastructure spending.  But as a Congressional committee report found, tax holidays did not achieve that end, as confirmed by the experience of a previous tax holiday in 2004.

As these illustrations make painfully obvious, the bottom line is that our policymakers fail to understand the broader problem that hinders America’s economic growth and global tax competitiveness.

Fortunately, with the new Congress we now possess an excellent opportunity to make real progress, an opportunity to enact broader tax reform.  With a more simplified and competitive corporate tax code, we would add roughly 540,000 jobs and increase our national gross domestic product by $92 billion through 2032, according to a Heritage Foundation Report.  In addition, not only would we remove the obstacles that currently drive American companies (and the jobs they create) abroad along with their profits, but we would make the United States an even more attractive place for companies all over the globe to relocate and invest.

Finally, it should be noted that this is not an issue constrained by traditional political divisions, a typical divide between the left and the right.  Rather, it’s an issue that offers the opportunity for bipartisan and commonsense reform.  Accordingly, there’s no excuse not to finally get it done, thereby improving our economy, boosting jobs and making our code competitive with the rest of the world at long last.

August 13th, 2014 at 3:10 pm
Ramirez Cartoon: Tax Inversion
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Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

August 1st, 2014 at 10:55 am
Video: Abused By The Government? It’s Your Patriotic Duty.
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CFIF’s Renee Giachino discusses the senseless legislative and PR push by the Obama Administration and many Congressional Democrats against U.S. corporations legally working to reduce their tax burden.  Giachino explains that the most effective way forward is to reduce the U.S. corporate tax rate – currently the highest in the developed world – so American companies can better compete in the global economy.

April 4th, 2014 at 12:01 pm
Latest Jobs Report Confirms Desperate Need for U.S. Corporate Tax Reform
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April 1 marked an important milestone in America.  Not because it was April Fools’ Day, but because it marked the second anniversary of the United States claiming the inglorious title of the developed world’s highest corporate tax rate.

The U.S. hasn’t achieved comprehensive tax reform since 1986.  Ronald Reagan was early in his second term as President, Michael Jordan was still five years away from his first NBA title and Pixar animation studios first opened.  Over the ensuing three decades, however, our international trading partners and competitors have accomplished reform, particularly in their corporate tax codes.  As a result, America’s 39% rate unfortunately stands as the world’s highest.

Americans can rightfully claim, “We’re number one” in many areas, but it’s simply unacceptable that the highest corporate tax rate remains one of them.  It constitutes a continuing drag on business growth, job creation and wage increases.  And as yet another disappointing jobs report today confirms, we cannot afford to maintain the status quo.  Numerous studies show that a lower corporate tax rate creates jobs and economic growth, so we must shift our current strategy away from government bailouts, welfare and unemployment checks, and more toward restructuring the tax code and empowering the private sector to hire.  Our world becomes increasingly interconnected each day, and we simply cannot cede competitiveness to other nations whose tax codes are far more appealing to new businesses.  The U.S. spent the 20th century building an economy that was the strongest and most powerful in the world, but lack of action on tax reform jeopardizes that global standing.

Moreover, this isn’t a partisan issue.  Republicans and Democrats, including Barack Obama himself, agree that it has been too long since we have undertaken comprehensive tax reform.  Accordingly, there’s no excuse for further delay.

Let’s not let another three decades pass us by without corporate tax reform.  Let’s instead achieve a code that actually encourages businesses to grow and hire workers.

January 17th, 2014 at 12:51 pm
Time to Fix the Corporate Tax Code, While Fleeting Bipartisan Consensus Exists
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There is no better example of Washington’s dysfunction than the U.S. tax code.  With President Obama’s annual State of the Union Address less than two weeks away, discussion about how to fix our broken tax code is growing.  In particular, the House Ways & Means Committee released a video this week highlighting its problems, and some proposals about how to fix it.

WATCH THE VIDEO: https://www.youtube.com/watch?v=BGizlBE-u10&feature=youtu.be

The last time America’s tax code was overhauled was in 1986, under President Ronald Reagan.  Obviously, very much has changed since then, from the dot-com boom-and-bust, the rise of China as an economic powerhouse and the sub-prime mortgage crisis, just to name a few.  What’s more, the tax code continues to grow more complicated with each passing day.   According to House Ways & Means Committee research, more than 4,400 changes to the tax code have occurred in the last 10 years, amounting to about one change per day.  While other countries have been simplifying their codes and reducing rates, America’s tax burden continues to grow in scope and complexity.

While the fleeting political will do something still exists – even President Obama himself proclaimed, “Our corporate tax rate is too high” – action is urgently required.  The best solution is one that makes America more competitive globally and leads to economic growth.  America’s corporate tax rate currently stands at 35% – the highest in the world.  Accordingly, a proposal to lower that corporate rate, while broadening the base, will result in a simpler, fairer tax code that both sides of Congress can get behind.

In today’s Wall Street Journal, former Japanese Diet member Mieko Nakabayashi and former U.S. Deputy Assistant Secretary of the Treasury James Carter spell out in stark terms the need for reform and reduction of U.S. corporate taxes, now the highest in the industrialized world.  In particular, they highlight the alarming exodus of large corporations from America to more hospitable tax regimes with this statistic:

When the U.S. last cut its corporate tax rate in 1986, 218 of the world’s 500 largest corporations measured by revenue were in the U.S.  Today, that number is 137.  Similarly, the number of Japanese corporations in the Fortune Global 500 fell to 68 last year from 81 in 2005.  While there is no single explanation for the drop, Tax Foundation chief economist William McBride tells us:  ‘The common thread behind all of this is the U.S. corporate tax, which is the most punitive in the developed world.’”

We live in a period of unprecedented political polarization.  The need to reduce our corporate rate, however, has actually achieved bipartisan agreement, with Barack Obama himself proclaiming the rate too high.  Accordingly, the time is now to enact reduction and reform, lest America’s legacy of economic leadership deteriorate further.

November 1st, 2013 at 4:33 pm
New Research Confirms Need for Corporate Tax Reduction and Reform
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The United States keeps shooting itself in the proverbial foot with our foolishly high and complex corporate tax rate.  Fully 31 of the world’s 34 leading economies have lowered their corporate tax rates since 1997 alone, but the U.S. is not among them.  Consequently, as all other competitor countries lower their rates, corporations flee for better shores, never to return.  And with those corporations go critical American jobs.

Maintaining a federal corporate tax rate of 35% in addition to various state corporate taxes – the highest in the developed world – doesn’t just impede American businesses.  The code is also riddled with Byzantine loopholes that warp decisionmaking and dictate winners and losers.  And contrary to popular myth, most of those loopholes aren’t accessible to most companies.  To the contrary, new research by PricewaterhouseCoopers (PwC) reveals that the effective tax rate for corporations was 36.2% from 2004 – 2010.  Stripping out many of the false assumptions of the GAO report that claimed an effective U.S. rate of approximately 13%, the PwC report is a devastating indictment of our tax code that highlights its unfair and punitive nature.

Our economy continues to struggle, and with so much regulatory uncertainty and chaos in Washington it would be nice to focus on something on which everyone sees eye-to-eye.  Reforming the corporate tax rate is precisely that sort of bipartisan solution, something widely acknowledged by both sides as the correct move.  Even President Obama, whose policies have done so much to impede economic and job growth, has gone out of his way to emphasize that reality.  We simply must reduce corporate tax rates and reform our tax code so that our economy isn’t permanently crippled by it.  Although pronouncements of the downfall of the United States are greatly exaggerated, it would be wise for us to avoid heading down that path due to outdated corporate tax policies that nobody supports.

The time for reduction and reform is now, before it really is too late.

July 19th, 2013 at 3:50 pm
Glaring Statistic Emphasizes Need to Reduce and Reform U.S. Corporate Taxes
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In today’s Wall Street Journal, former Japanese Diet member Mieko Nakabayashi and former U.S. Deputy Assistant Secretary of the Treasury James Carter spell out in stark terms the need for reform and reduction of U.S. corporate taxes, which are now the highest in the industrialized world.  In particular, they highlight the alarming exodus of large corporations from America to more hospitable tax regimes with this statistic:

When the U.S. last cut its corporate tax rate in 1986, 218 of the world’s 500 largest corporations measured by revenue were in the U.S.  Today, that number is 137.  Similarly, the number of Japanese corporations in the Fortune Global 500 fell to 68 last year from 81 in 2005.  While there is no single explanation for the drop, Tax Foundation chief economist William McBride tells us:  ‘The common thread behind all of this is the U.S. corporate tax, which is the most punitive in the developed world.'”

We live in a period of unprecedented political polarization.  The need to reduce our corporate rate, however, has achieved bipartisan agreement, with Barack Obama himself proclaiming, “Our corporate tax rate is too high.”  Accordingly, the time is now to enact reduction and reform, lest America’s legacy of economic leadership deteriorate further.

May 31st, 2013 at 10:51 am
Video: Another Bit At the Apple
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In this week’s “Freedom Minute,” CFIF’s Renee Giachino discusses how, in the midst of scandals surrounding Benghazi, the IRS and DOJ conducting surveillance on the media, Congress recently decided to scrutinize an iconic American company “for failing to pay taxes that it didn’t owe.”

Giachino points to this latest lunacy as further evidence supporting the need for corporate tax reform that includes lower rates to bring more business back to the United States, create more jobs and generate more revenue for the treasury.

 

February 26th, 2013 at 5:30 pm
Letter: Economists Call For Corporate Tax Reduction and Reform
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Earlier this month, we at CFIF lamented the fact that the U.S. now claims the developed world’s highest corporate tax rate.  Fortunately, as we noted, a bipartisan consensus is emerging in favor of reducing and reforming that rate.

Now, in a letter published by The Economist, twenty leading economists from both academia and the private sector called for a lower rate and illustrated how our current rate discourages employment and thwarts domestic investment:

A high corporate tax rate impairs our ability to attract domestic and foreign investment. Because capital and information flows more freely across borders in the Internet age, disparities in the corporate income tax rate can now have a greater impact on location decisions than in the past. The number of Fortune Global 500 headquarters in the United States decreased from 179 to 133 from 2000 to 2011, while China (25.0 percent tax rate), Switzerland (21.2 percent tax rate), and Korea (24.3 percent tax rate) experienced sizable increases over the same period. De Mooij and Ederveen (2005) found that a one percentage point reduction in a host country’s tax rate increased foreign direct investment by 2.9 percent. The OECD (2011) found that corporate income taxes, of all the different types of taxes, are most harmful to economic growth and capital accumulation.

A high corporate tax rate undermines job creation and reduces wages. According to the Commerce Department, foreign investment supported five million U.S. jobs in 2010. To the extent that our relatively high corporate tax rate discourages foreign investment, it discourages job formation. Moreover, several academic studies have found that much of the burden of the corporate income tax is borne not by capital but by domestic labor, in the form of lower wages. For example, Mathur and Hassett (2010) analyze the relationship between corporate tax rates and the average manufacturing wage for 65 countries over a period spanning 1981–2005; they estimate that a one percent increase in the corporate income tax leads to a one half of one percent decrease in hourly wages. The U.S. Treasury Department assumes that 25 percent of the incidence of corporate tax is borne by workers. Moreover, policies that increase the cost of capital will result in less capital being invested.”

As summarized by former Clinton Administration adviser Elaine Kamark and former Reagan adviser James Pinkerton, “This is another confirmation of the growing consensus among experts and political leaders that the U.S. corporate tax rate is too high and the code too complex.”  They added, “As the experts have established, the current U.S. tax code is an impediment to investment, growth and job creation.”

The intellectual consensus thus continues to coalesce.  Now it’s time for the White House and Congress to act before more harm is done.

February 15th, 2013 at 12:50 pm
A Corporate Tax “Cut” Isn’t Enough

Tim’s column on corporate tax rates is superb. But I’d go even farther.

Before I explain, I’d like to highlight this part of Tim’s column, which is right on target:

At one point Lew stated that any reform must bring in more revenue to feed out-of-control federal spending, and suggested that although America’s official tax rate is too high, the actual effective rate is “much lower.”  Senator Portman helpfully instructed him that even the U.S. effective rate far exceeds the industrialized world average.

We must also beware Lew’s other caveat above.  Liberals will attempt to exploit corporate tax reform as a source of new revenue for the federal government.  Our budgetary problem, however, is not insufficient revenues but extravagant spending, as illustrated by the fact that if we simply returned to 2005 spending levels we would have enjoyed a $100 billion surplus last year.

The deficit problem clearly is caused by over-spending. But one thing I would emphasize is that cutting corporate rates probably would not add anything to the deficit; indeed, the sort of parallel tax cut, that of cutting capital gains tax rates, has consistently resulted in greater total revenues from capital gains actually coming into federal coffers. The added economic activity really has “paid for itself,” and then some.

But, as I said, I would go farther. As I’ve written here and elsewhere before, I would completely eliminate corporate income taxes. Gone. Kaput. Finis. Nada. And, obviously, if the rate is zero, there would be zero revenues from that particular tax, so of course the “more than paid for itself” argument would go out the window.

But that doesn’t mean eliminating the tax would cost much or any revenue, total, to the feds. Indeed, it was a left-leaning, former Democratic Capitol Hill budget staffer who first suggested to me the idea of completely eliminating this tax, and he, as a number cruncher, explained that he thought it would be almost revenue neutral. Some of the “lost” taxes would be recouped immediately via higher receipts from capital gains taxes and dividend taxes (because corporate profits obviously would be expected to rise), and some would be recouped through substantially higher economic growth, and some would be recouped due to a huge rush of companies repatriating their business operations. And so on, as I’ve explained elsewhere — including some savings on the spending side due to cutbacks in no-longer-needed IRS enforcement.

If I were a politician rather than a journalist, I would make this proposal part of my platform — and dare any demagogue to criticize me for it as long as it the criticism was done in open debate.

Finally, it’s worth noting that other very smart people have pushed the same idea, including Megan McArdle, formerly of The Atlantic and now apparently of The Daily Beast.

February 17th, 2012 at 8:53 am
Podcast: Time to Lower the Corporate Tax Rate
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In an interview with CFIF, James Pinkerton, co-chair of RATE (Reforming America’s Taxes Equitably), Fox News contributor and former White House domestic policy adviser, discusses the need to lower the U.S. corporate tax rate to enable American companies to compete in the global marketplace and jumpstart U.S. economic and job growth.

Listen to the interview here.