The Corporate Tax Conundrum

Reducing the tax rate for companies substantially, while eliminating targeted business tax preferences and broadening the corporate tax base, would increase both investment and workers wages.

Economy Sunrise s strong tax base includes Sawgrass Mills, Sawgrass International Corporate Park, IKEA and other commercial development.

What Corporate Tax for Europe?

That had been accomplished by widening the tax base, improving administration efficiency, reducing corporate income tax, introducing a personal income tax of 10 per cent and keeping value added tax at 10 per cent.

This disincentive disappears if the corporate tax base is decoupled from current profits and linked to some broad measure of activity.

This disincentive disappears if the corporate tax base is decoupled from current profits and linked to some broad measure of activity.

These revenue losses could be offset by curtailing so called corporate tax expenditures deductions, credits, and other special tax provisions that subsidize some economic activities while penalizing others and broadening the corporate tax base. Both President Barack Obama s plan for business tax reform and the Simpson Bowles deficit reduction plan propose reducing such expenditures to pay for a reduction in the corporate tax rate.

That said, if the goal of corporate tax reform is to boost investment and job creation, broadening the tax base to pay for a lower rate could be counterproductive.

A lower corporate tax rate would weaken this justification.

Corporate tax expenditures narrow the base, raise the cost of tax compliance, and distort decisions about investment projects, how to finance them, what form of business organization to adopt, and where to produce.

Instead of cutting proven tax incentives for business investment, the US should offset at least some of the revenue losses from a lower corporate tax rate by raising tax rates on corporate shareholders.

Indeed, cutting these items to pay for a reduction in the corporate tax rate could end up increasing the tax on corporate economic activity in the US.

And fourthly, it is important to expand the tax base.

This can include broadening the tax base, reducing tax avoidance and evasion, improving tax collection, and developing new, cooperative international taxation strategies.

As a consequence of the ensuing tax competition, corporate tax rates have fallen to 15 25 in most European countries.

The resulting revenue loss could be offset by raising the corporate tax rate.

The Supreme Court even found a corporate income tax law unconstitutional in 1909.

In order to survive international tax competition and thus be able to rely on corporate taxes as a source of revenue Japan s corporate tax rate should be lowered in the long run.

Moreover, pension funds, retirement plans, and non profit organizations, which receive about 50 of all corporate dividends, do not pay tax on these earnings, and would benefit from a lower corporate tax rate.

That is why countries around the world have been cutting their corporate tax rates.

Maryland collected 1 billion in corporate income tax revenue, the most in the region.

Tax reforms have concentrated on expanding the base, thus avoiding the higher tax rates and adverse effects on incentives.

Virginia has the lowest corporate income tax by far of the three jurisdictions (all of which have flat corporate rates) at 6 percent.

Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income.

A 15 tax would raise 300 billion. The choice of tax rate would be part of the negotiation over how far to reduce the overall US corporate tax rate.

Tax policy reforms should be designed to stress broadening the tax base rather than raising the rates, eliminating disincentives to investment and even simplifying the tax structure.

BERKELEY The United States now has the highest statutory corporate income tax rate among developed countries.

Some LDCs have made progress in undertaking tax reform, broadening the non tax revenue base and improving the efficiency of financial institutions.

Moreover, a high corporate tax rate is an ineffective and costly tool for producing revenues, owing to innovative financial transactions and legal tax avoidance mechanisms.

These so called inversions would reduce these companies total tax bill by allowing them to escape from the United States uniquely unfavorable corporate tax rules.

For example, a French firm that invests in Ireland pays the 12.5 Irish corporate tax but is then free to repatriate the after tax profits with a tax of less than 5 .

Broadening the income tax base is a central element of the highly regarded Simpson Bowles proposals for tax reform in the United States.

(If one worried about double taxation, one could allow a credit for corporate taxes on individual tax returns.)

While gains from fundamental tax reform say, replacing the current tax system with a broad based consumption tax are large, on the order of 0.5 1 percentage point per year of economic growth for a decade, corporate tax reform would also boost growth.

And, while raising so much revenue with so low a tax rate sounds grand, the declining volume of trades would shrink the tax base precipitously.

And, while raising so much revenue with so low a tax rate sounds grand, the declining volume of trades would shrink the tax base precipitously.

And we want to shift the systems that open the doors for people who were formerly tax burdens to become part of the tax base.

In addition, private sector firms provide most of the tax base needed to fund public services.

The base for the land tax (excluding buildings) is the taxable value of privately owned land.

And on this subject the state has disastrously narrowed the income tax base of the municipalities!

And curtailing accelerated depreciation, the manufacturing production deduction, and the R amp D tax credit which account for about 80 of corporate tax expenditures would involve significant tradeoffs.

In 1999, when Laar became Prime Minister again, he abolished the tax on corporate profit, which was harming entrepreneurship.

Most countries that reduced their corporate tax rates have followed this path, while the US has done the opposite.

Greece s tax system needs to be revamped, and the revenue authorities must be freed from political and corporate influence.