Ed Dolan's Econ Blog

Promises of Corporate Tax Reform are Forgotten as Obama Wages War on Inversions

The Obama administration has taken off the gloves in its war on runaway corporations. On April 4, the Treasury released a new set of rules designed to curb “inversions,” a strategy in which a US company cuts its corporate tax burden by merging with a foreign company and moving its official tax residence out of the United States. The pharmaceutical giants Pfizer and Allergan immediately announced that they would abandon their pending mega-billion inversion deal.

The new rules are a change in policy for the administration. At one time, President Obama saw the US corporate tax code as needing deep reform, not stronger enforcement. In his 2011 State of the Union Address, he said:

Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries.  Those with accountants or lawyers to work the system can end up paying no taxes at all.  But all the rest are hit with one of the highest corporate tax rates in the world.  It makes no sense, and it has to change.

So tonight, I’m asking Democrats and Republicans to simplify the system.  Get rid of the loopholes.  Level the playing field.  And use the savings to lower the corporate tax rate for the first time in twenty-five years—without adding to our deficit.  It can be done.

It could have been done, but it wasn’t. Now, instead, Obama seems have adopted the views of progressive icon Senator Elizabeth Warren, as expressed in a speech last November, reported on the progressive website Common Dreams. Warren disagreed with the contention that corporate taxes are too high. She urged Treasury Secretary Jack Lew, who was already working on the new rules, to be sure they were written in a way that increased the amount of taxes that corporations pay:

When I look at the details, I see the same rigged game, a game where Congress hands out billions in benefits to well-connected corporations, while people who really could use a break. . . are left holding the bag.

Only one problem with the over-taxation story: It’s not true. There is a problem with the corporate tax code, but that isn’t it. It’s not that taxes are far too high for giant corporations, as the lobbyists claim. No, the problem is that the revenue generated from corporate taxes is far too low.

In my opinion, the Obama of 2011 was right, while Warren, and the Obama of 2016, are wrong. Here is why real corporate tax reform—preferably the complete abolition of the corporate income tax—is a cause that progressives should embrace as enthusiastically as do conservatives.

The Corporate Tax is a Tax on Labor

Who bears the burden of the corporate income tax? Not corporations as such, which are legal entities that can feel no pain. One way or another, the economic burden of the corporate tax must fall on corporations’ human stakeholders—shareholders, creditors, workers, or customers.

Determining the exact incidence of the corporate tax is tricky. A 2011 report from the Urban Institute provides a good summary of the issue. Beginning in the 1960s, it says, economists concluded that essentially all the burden fell on shareholders. That became the standard approach for reporting  the distribution of the tax burden among the population. The Congressional Budget Office and other official agencies continue to use that assumption.

More recent studies, however, indicate that growing globalization of business has changed things. The early studies were based on closed-economy models. In contrast, today’s world is one of open  economies, where not just goods and services, but also factors of production, can move from one country to another. In a globalized world, tax avoidance is a major motivator of international factor flows. And although both capital and labor are mobile to a degree, capital is much more mobile, and therefore more successful at avoiding taxes.

As capital flows to countries where corporate tax rates are low, the amount invested per worker in high-tax countries falls. The decrease in investment shifts the burden of corporate taxes to workers. The classic assumption is that it does so mainly through lower wages, but (as explained in this earlier post), where there are frictions in domestic labor markets, displaced workers do not immediately find work even at lower wages. Extended jobless spells add to the burden on labor. Exactly how much of the total burden is shifted is hard to tell. Maybe all, maybe 70 percent, maybe half. The shift may vary over time and from one industry to another. In any case, the hypothesis that shareholders bear the full burden of the corporate income tax is increasingly unrealistic.

The standard assumption that corporate taxes fall entirely on shareholders leads to overstatement of the share of taxes paid by high-income groups. For example, consider an estimate published by the Tax Policy Center, which uses the standard assumption. The Center estimates that the top-earning 1 percent of taxpayers pay an average of 28 percent of their income in federal taxes, compared to 18.9 percent for the middle 20 percent. However, the 28 percent figure for the top 1 percent includes a corporate tax component of 7.9 percent. What happens if we assume that component falls on labor income, instead of on income to shareholders? Labor income constitutes 93 percent of all income for the middle 20 percent of taxpayers, but just 45 percent for the top 1 percent. Shifting the assumed incidence of the corporate tax from shareholders to workers would reduce the gap in tax rates between the top 1 percent and the middle 20 percent by at least half. That would make the US tax system quite a bit less progressive than standard data indicate.

In short, the idea that the corporate tax is a tax on the rich is largely an illusion. Politicians on both the left and the right like to rally their base by pretending it is a tax on capital, but capital skips away to low-tax jurisdictions, leaving workers with fewer jobs and lower wages.

Why the numbers don’t show the full burden of the corporate tax

In the early 1950s, the corporate tax accounted for nearly a third of all federal revenues. Today, it brings in barely a tenth, as the following chart shows. But here is the puzzle: If the corporate tax brings in so little revenue, and if shareholders can shift the burden of what remains to workers, why do business leaders hate it so much?

P160409-1The answer is that the burden of the tax is much larger than it appears to be, if we look only at the revenue the tax brings in. We need also to account for the financial, administrative, and strategic costs of tax avoidance. Sure, you can lower your tax burden by moving your corporate headquarters to Ireland, but if such a strategy were costless, then everyone would be there by now. In reality, you can avoid taxes only by making locational, operational, and financial decisions that you would not otherwise make—precisely because they are costly.

As a hypothetical example, suppose your corporation owes $35 million in tax on $100 million in profit, for a net income of $65 million after tax. By changing your product line, moving your corporate headquarters, and reconfiguring your financing, you can cut your taxes to $10 million. Unfortunately, implementation of those measures incurs administrative costs of $12 million and cuts your revenue by $8 million. You end up with after tax income of just $70 million.

Yes, that’s still worthwhile in the sense that you are $5 million better off than if you had just paid your taxes. But what is the true measure of the burden that the US corporate tax system places on your company? Is it the 12.5 percent you pay on your remaining $80 million in before-tax profits, or is it 30 percent—the bite that $10 million in taxes plus $20 million in tax avoidance costs takes out of your original $100 million? Obviously, it is the latter.

In short, tax revenue actually collected is not a complete measure of the degree to which the corporate tax undermines a country’s industrial efficiency and international competitiveness. US corporations face the highest statutory corporate tax rates of any OECD country, as the next chart shows. As a result, they have the greatest incentive to engage in costly tax avoidance strategies, the burden of which, like the burden of the taxes themselves,  falls largely on American workers.


How to fix the corporate tax

The best way to fix the corporate tax would be to abolish it altogether. Yes, that would leave a hole in the federal budget, but there would be several ways to make up the lost revenue. Any of them would produce fewer distortions to business practices than the corporate tax in its current form.

Taxing capital gains and dividends as ordinary income would be the most straightforward approach. Individual income taxes on dividends and capital gains are not as easily shifted to others as are corporate taxes. What is more, one of the main arguments for special treatment of investment income in the individual income tax code is to avoid the “double taxation” that arises when profits are taxed first at the corporate level and a second time when they are paid out to shareholders. Getting rid of the corporate tax also gets rid of the double taxation problem. (In this earlier post I dealt with other, more technical arguments for tax breaks on investment income, none of which I find convincing.)

If abolishing the corporate tax altogether sounds too radical, the next best thing would be to broaden its base, lower its rates, and close its loopholes, as President Obama himself advocated just a few years ago. Even modest reforms along those lines could get the U.S. corporate tax down from the highest rate in the world to the OECD average of around 25 percent. That would substantially reduce incentives that have induced companies as diverse as Burger King and Pfizer to look for friendlier homes abroad.

The bottom line

All discussions of fair and effective corporate taxation come come back to the problem that corporations are not people. Think of them as more like rats. Rats, with their collapsible skeletons, can squeeze through a hole the size of a quarter. Corporations do much the same. They can move their legal residence to an offshore tax haven quicker than you or I could load a U-Haul trailer to move across town. In fact, they don’t even have to move. They can stay right where they are and shift their profits to offshore subsidiaries using transfer pricing, fees for use of intellectual property, or some other entirely legal gimmick. If not that, they can morph into a limited partnership or a subchapter-S corporation.

Corporations as legal entities cannot bear the economic burden of taxes. In a globalized world of mobile capital, the burden both of taxes paid and of costly tax avoidance strategies falls largely on workers. What is there for a progressive not to love in abolition of the corporate income tax?

Somehow, though, our Democratic presidential candidates have not grasped this truth. Hillary Clinton backs measures much like those of the Obama administration, which retreat from earlier reform proposals. This ought to be the perfect opportunity for Bernie Sanders to differentiate himself from Clinton, help workers hit by globalization, and show himself to be the true progressive in the race. All he would have to do would be to push for abolition of the corporate tax combined with full taxation of personal investment income. Where is Bernie when we need him?

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28 Responses to “Promises of Corporate Tax Reform are Forgotten as Obama Wages War on Inversions”

Patrick R. SullivanApril 11th, 2016 at 2:30 pm

Very good post. I'd suggest eliminating the tax on profits entirely and replace it with a small percentage tax on gross revenue. Think of the efficiencies corporations could enjoy by eliminating their tax planning departments.

And, keep in mind that most businesses fail rather than succeed.

Ed Dolan EdDolanApril 11th, 2016 at 2:51 pm

Gross revenue, maybe, but if you are going that route, probably value added would be better. That is the idea of Cruz's "business flat tax", VAT by another name.

LordApril 11th, 2016 at 2:59 pm

I guess that is the question, how much simpler is a value added tax and how much do companies spend to comply with it?

benl8April 11th, 2016 at 3:23 pm

The Citizens for Tax Justice has published extensive documentation on corporate tax avoidance. A 2014 article "Corporate Income Tax Repeal Is Not a Serious Proposal" details the reasons why the tax is needed. #1 appeals to me the most — "With no corporate income tax, high-income people could create shell corporations to indefinitely defer paying individual income taxes on much of their income." Today the total private net worth of all households is $86.8 trillion (FRB, Flow of Funds, page 2), about 5 times larger than annual output. It's huge, $710,000 is the average per household, about $270,000 per capita. We are extremely wealthy in a world where most humans are surviving on less than $5 a day, less than $2,000 a year. I think we need a tax on financial wealth, not just a local property tax. That $87 trillion serves no purpose but to inflate financial markets. Aside from my radical opinions, the CTJ has done impressive research on the corporate tax problem. In a world of tax havens, about 10% to 15% of all financial assets are hidden from taxation, we shouldn't give out another haven to the ultra wealthy. Put that money to use improving the state of human welfare. Much of the world's financial resources may as well be buried in the Mariana Trench under a load of radioactive cement for all the good it does for humanity. — see… — and

Ed Dolan EdDolanApril 11th, 2016 at 3:30 pm

I am not entirely sure about how it would work to create a shell corporation to indefinitely delay paying taxes. Wouldn't any such corporation be a so-called subchapter S corporation, something that already exists and is taxed on the basis of flow through of profits to the owner? I don't think it would be difficult to write a law that abolished the corporate tax in a way the ensured that such entities were taxed as individuals.

benl8April 11th, 2016 at 3:53 pm

As income is generated it should be taxed, not at some later date. About the options of shell corporations, tax-write offs, and dodges I have no information, but I think tax dodges could be created. Here's more of the essay I think you should read: "First, the personal income tax would have an enormous loophole for the rich if we didn’t also have a corporate income tax. A business that is structured as a corporation can hold onto its profits for years before paying them out to its shareholders, who only then (if ever) will pay personal income tax on the income. With no corporate income tax, high-income people could create shell corporations to indefinitely defer paying individual income taxes on much of their income.

Second, even when corporate profits are paid out (as stock dividends), only a third are paid to individuals rather than to tax-exempt entities not subject to the personal income tax. In other words, if not for the corporate income tax, most corporate profits would never be taxed.

Third, the corporate income tax is ultimately borne by shareholders and therefore is a very progressive tax, which means repealing it would result in a less progressive tax system.

This last point deserves emphasis. Proponents of corporate tax breaks argue that in the long-term the tax is actually borne by labor — by workers who ultimately suffer lower wages or unemployment because the corporate tax allegedly pushes investment (and thus jobs) offshore. But most experts who have examined the question believe that investment is not entirely mobile in this way and that the vast majority of the corporate tax is borne by the owners of capital (owners of corporate stocks and business assets), who mostly have high incomes. This makes the corporate tax a very progressive tax.

For example, the Department of the Treasury concludes that 82 percent of the corporate tax is borne by the owners of capital. As a result, the richest one percent of Americans pay 43 percent of the tax, and the richest 5 percent pay 58 percent of the tax."

ThomasGrennesApril 11th, 2016 at 4:35 pm

The table of corporate tax rates is informative. The highest rate in the US and the lowest in Ireland is , of course, the reason why US-based firms move to Ireland. It is also interesting to note that Sweden and Denmark are below the median in tax rates. Maybe that is what Bernie Sanders means when he asks the US to be more like Sweden and Denmark. Lower corporate tax rates. Those countries also have a less intrusive framework for regulating business, which is why the Economic Freedom Index gives those countries a higher score than the US for business regulation. It is also informative to point out that the total cost of the tax is greater than the revenue paid by businesses. There is also a deadweight loss that some pay, but no one receives.

Patrick R. SullivanApril 11th, 2016 at 7:42 pm

'Much of the world's financial resources may as well be buried in the Mariana Trench under a load of radioactive cement for all the good it does for humanity.'

Except for all the factories, office buildings, transport, supply lines, you mean? You know, the things that produce our food, clothing, shelter and what not.

Ed Dolan EdDolanApril 11th, 2016 at 10:02 pm

"But most experts who have examined the question believe that investment is not entirely mobile in this way and that the vast majority of the corporate tax is borne by the owners of capital"

Well, I agree, that is the point. Let's start counting experts and see who can come up with more. I have some in my links, who are yours?

windrivenApril 11th, 2016 at 10:59 pm

"As capital flows to countries where corporate tax rates are low, the amount invested per worker in high-tax countries falls. The decrease in investment shifts the burden of corporate taxes to workers. "

So, it's a race to the bottom. Let's see who can get to zero first! Or pay! Corporations are valuable engines of the economy. We should pay them to stay in this crappy cesspool of a nation. If we pay enough we can probably get Seimans and Mercedes and if we're lucky maybe Tata to move here! It'll be great!

Ed Dolan EdDolanApril 12th, 2016 at 7:45 am

Let me add this: "As income is generated it should be taxed, not at some later date."

I would point out that a great many economists have argued against this idea and in favor of a consumption tax. The idea is that it is better to wait and tax income when it is spent, not right away when it is earned, in order to encourage saving and investment. Taxing consumption instead of saving would not necessarily mean changing the progressivity of the tax system as a whole. A consumption tax could be structured to place any share of the tax you want on each percentile of the income distribution.

blueicetwiceApril 12th, 2016 at 8:01 am

Ben's link:

There is some truth to Ben's and the smorgasbord justice group. It is my understanding
when incorporating as a "C" corp, you can minimize salaries of the management team
and remunerate with bonuses, which are subject to a 25% toll.

Of course, the varies tax codes can always be alter to serve societal norms and
the need of that of the Social Justice Industry – which by the way pays no taxes on revenues.

This is what Ben's link argues: " For example, the Department of the Treasury concludes that 82 percent of the corporate tax is borne by the owners of capital. As a result, the richest one percent of Americans pay 43 percent of the tax, and the richest 5 percent pay 58 percent of the tax."

The DOTrea is also clueless, as Professor Dolan has already mentioned the fact
is that these taxes and as well as regulatory costs, are passed onto the end user.

"But Apple is a perfect example of a corporation that does not actually move many jobs offshore but rather is engaging in accounting gimmicks to make its U.S. profits appear to be generated in offshore tax havens. These gimmicks take advantage of the rule allowing American corporations to “defer” (delay indefinitely) paying U.S. corporate income taxes on the profits they claim to earn abroad. Lawmakers will end these abuses when they see that voters’ anger over corporate tax loopholes is even more powerful than the corporate lobby."

So all that is need today to avoid many taxes are "gimmicks." With governmental units
extracting tens of billions from the business "community" in fines and penalties, why would
the number one cash cow, Apple, be allowed to shirk the law? And yes, foreign governmental
units are not taxing Apple either. What this "Justice" group wants is merely double taxation!
In fact, they would not even be apposed to triple taxation, as Apple's net margins are
simply to high.

How about taxing those whom pay no taxes whatsoever, especially those who receive
earned income credits?

Ben, you see little advantages of having a successful and healthy business sector,
other than to "feed" the statist appetite. More non-product spending by governmental
units, until they are all we have left. (back to the USSR!)

A more serious look at this issue that the PR release from a Social Justice org.

"With no corporate income tax, high-income people could create shell corporations to indefinitely defer paying individual income taxes on much of their income."

Ben, can you tell me how this is done? And how would management pay for it's lifestyle
of the rich and famous?

It already being done, as most compensation comes in the form of stock options.

Now is the opportunity to form a new committee – Plebs for Stock Option Justice.
As a shareholder, I take this very serious as all too many managers are over "stocked."

Just one more note, this is either the second or third year, with a record number Americans
of turning in their citizenship. Maybe the taxes on their businesses played a partial role.
Maybe this is no longer the land of opportunity but the land of regulations and oppressive
taxes governmental units.

HUD, now wants regulatory control of the RV business It just never, never ends.

blueicetwiceApril 12th, 2016 at 8:40 am

Professor Dolan, I completely embrace the entire content of this
most excellent article.

Business nor individuals, should not be viewed as an ever increasing
revenue scheme for government programs and Social Justice operatives.

As Uncle Milton said, the more you tax things, the less you get.

The more you handout, the longer the line.

If America eliminated corporate tax, the nation would lead the world into
a new and prosperous re•nais•sance, with tax revenue risings instead of diving
and the influence and yoke of government reduced.

Economics, is not taught in lower scool and optional in the
universities; hence all of the debt laden students with their
highly prized bac•ca•lau•re•ates and the clear need for daily subsides.

blueicetwiceApril 12th, 2016 at 9:35 am

"What is a 'Dividends Received Deduction – DRD'
A dividends received deduction (DRD) is a tax deduction received by a corporation on the dividends paid to it by companies in which it has an ownership stake. The purpose of this deduction is to soften the consequences of triple taxation. Triple taxation occurs because the company paying the dividend does so with after-tax money and the receiving company is subject to income tax on the dividends. Therefore, if the company that receives the dividends decides to pay out its shareholders, the money will have been taxed three times."

This quote below from the Social Justice Tax Committee, as linked by Ben.

"Second, even when corporate profits are paid out (as stock dividends), only a third are paid to individuals rather than to tax-exempt entities not subject to the personal income tax. In other words, if not for the corporate income tax, most corporate profits would never be taxed."

This is completely nonsensical and written by someone without knowledge.
Stock dividends are taxes differently but they are indeed taxed unlike the above
quote. This article was patently bias, non factual, and poorly written., needs
to contract with a PR firm, as their press release has damage an already questionable

" Currently, ordinary dividends and short-term capital gains those on assets held less than a year are subject to one's income tax rate. However, "qualified dividends" and long-term capital gains benefit from a lower rate. Qualified dividends are those paid by domestic or qualifying foreign companies that have been held for at least 61 days out of the 121-day period beginning 60 days prior to the ex-dividend date.

In the case of qualified dividends and long-term capital gains, individuals in the 25% or higher tax bracket currently pay a 15% tax, whereas those in lower brackets are exempt from any tax. Beginning in 2013, the long-term capital gains rate will jump to 10% for lower income earners and 20% for investors in the higher brackets."

windrivenApril 12th, 2016 at 6:18 pm

"in order to encourage saving and investment."

I would argue that while consumer savings isn't all that great, we do not have a problem with availability of investment capital. We have a problem with demand and consequently a problem with insufficient enterprises in which to invest.

Ed Dolan EdDolanApril 13th, 2016 at 7:07 am

Yes, that's a widely shared view. But is taxing saving and rewarding spending the right answer? An alternative form of stimulus would be to tax consumption and borrow the excess saving (at low interest rates) to finance badly needed pubic infrastructure investment. That approach also has its fans. Living in MI, infamous for the third-world condition of much of its public infrastructure, I can see some sense in it myself.

windrivenApril 13th, 2016 at 9:16 am

"But is taxing saving and rewarding spending the right answer?"

If in fact the root of the problem is demand (consumption) and not availability of investment capital then yes, rewarding spending and taxing savings sounds right to me.

I once ran a sales force for a medical device company and had a large sign on the back of the office common area that proclaimed "Nothing Happens Until Somebody Sells Something." And in an economic situation like ours, nothing happens until someone buys something. No one invests in jobs, plant, and inventory without the promise of selling the result at a profit.

windrivenApril 13th, 2016 at 10:56 am

I certainly agree that the government needs to spend on infrastructure. But the original discussion was taxing spending versus taxing savings.

Infrastructure spending is certainly important but as stimulus it is pretty narrow. Building roads and bridges doesn't take the cast of thousands that it did fifty years ago. Automation has touched those activities as it has touched manufacturing.

Ed Dolan EdDolanApril 13th, 2016 at 11:41 am

I don't see that automation or nature of spending matters. You started out with premise that aggregate demand was insufficient. My suggestion was to encourage saving, then let government borrow that saving and spend it on infrastructure. It doesn't really matter, does it, how much of the spending is for asphalt, how much to hire contractors, how much to hire labor, how much to pay diesil bill for robot bulldozers, etc. Any way it works, it is injected into the economy and provides a stimulus. We are looking at AD = C+I+G+EX-IM. You say I is insufficient, you suggest add to C by taxing saving, I say add to G instead. Anyway, that is what I tell my Macro 101 students.

windrivenApril 13th, 2016 at 1:31 pm

I can certainly see the advantages of borrowing savings rather than having the Fed buy up the bonds to finance infrastructure. But viscerally I'd rather tax the filthy rich 😉

"It doesn't really matter, does it, how much of the spending is for…"

I guess I think that it does. Money that is spent on labor circulates into the economy differently than money that you give to Mitt Romney's RoboBridge enterprise. Some of the money that you give to Mitt may eventually find its way to someone's pocket who will spend that money on a new car or paint for the house or clothes for the kids. But Mitt already has that stuff.

I understand that Mitt having the money may arguably cause new enterprises to be created and so forth. But I keep coming back to the need for people – usually a lot of people – to be willing and able to buy stuff if we're to have real growth.

Anyway, it has been many years since I took Macro 101 and I didn't have nearly as interesting a professor as you. Further, I'm a scientist not an economist – 101 is all the Econ I ever took. So I appreciate the freebie. Thank you.

Patrick R. SullivanApril 13th, 2016 at 6:03 pm

Interesting article in the WSJ today by Richard Rubin, detailing the far reaching implications of the Obama decision;

The Treasury Department’s new corporate rules will reach far beyond the few companies that moved their legal addresses to low-tax countries, forcing many firms based in the U.S. to change their internal financing strategies and tax planning.

Corporate tax lawyers, who have spent the past week trying to understand one of the Obama administration’s most far-reaching tax regulations, say the rules cast aside decades of precedents and force corporations to alter routine cash-management techniques. The rules would also end a strategy used by companies such as Illinois Tool Works Inc. to repatriate foreign profits without paying U.S. taxes.

Tax lawyers were surprised at how many transactions may be affected by the rules, which address the line between internal company debt and equity.

“The breadth and scope of the regs are quite a bit beyond what anyone expected,” said Jason Bazar, a partner at Mayer Brown LLP in New York, who advises companies on cross-border transactions. “They’ve assumed the worst in certain transactions and not considered the commercial considerations.”

I remember that, in 'Dreams From My Father, ' Obama (or his ghost writer) said that the few months he spent working in a business–a newsletter for bond buyers–felt like he was 'behind enemy lines.'

Ed Dolan EdDolanApril 14th, 2016 at 7:03 am

Thanks for the link. It shows how the combination of high marginal rates and complex loopholes drives companies to use arcane financial strategies that they would otherwise stay away from. It also emphasizes a point I missed: I talked about avoidance costs, but there are also compliance costs that fall even on firms that do not attempt avoidance. Those costs, too, hit labor as well as capital. Complexity raises compliance costs.

Even with a corporate tax in effect, a lot of these items would disappear with lower rates and fewer loopholes. That would be more efficient than the Obama administration approach and, if structured correctly, would not affect total revenue to the government or total taxes paid by business. However, it would lower the burden of taxes paid plus avoidance/compliance costs.

Patrick R. SullivanApril 14th, 2016 at 3:02 pm

Which is why I favor a low percentage tax on a business's gross revenues–which I used to pay at about 4/10 of a percent out here in Seattle, to the Wash. St. Dept of Revenue every month. No tax planning needed, at all.

zerotaxMay 19th, 2016 at 8:06 am

I don't get it. The elimination of corporate tax rates could be used to leverage massive changes in how U.S. Corporations do business. If there is concern that the benefits won't go to labor, for example, then require it. "Thou shalt have lower taxes if you employ more workers". Put a number on it, a percentage or absolute. Require support for labor, and reduce taxes. Require true benefits, give lower taxes. Require that CEO's and top earners only get paid a maximum of 20 times the lowest paid worker in the company (or whatever number is best). Require that the corporation have at least x% of employees in the U.S. Require that the manufacturing exist in the U.S. Wouldn't a "zero" corporate tax rate be sufficient to accomplish all this. Wouldn't it be better for our corporations to do these things directly than to work through the government. Can't this incentive be used for large and small businesses alike. Won't the labor force increase in tax revenues more than make up for the corporate tax reduction. Make a zero corporate tax rate available to corporations that behave responsibly. Can't we do that. Just require that the money saved be equitably spent in the U.S. and on the workers. The rest of tax reform doesn't matter too much if everyone has good jobs, does it?