Is Corporate Tax Reform Realistic?

Is Corporate Tax Reform Realistic? by Howard Gleckman

My comments:

Corporate tax rate reform should probably go hand in hand with personal and payroll tax reform or reduction. The biggest base broadener is to turn the Corporate income (really profits) tax into a Net Business Receipts Tax by ending the deductibility of labor costs and expanding filing to all businesses, not just corporations.

There could a surtax for higher salaried employees and investors – although that brings up a reporting problem most conveniently solved by preserving an income surtax on the highest earners. This prevents the taxation of lower income investors and preserves the privacy of people who have independent income – who might be unemployable if doing so requires payment of a higher tax on their behalf.

Such a reform should also have a VAT portion, so that the public is conscious of taxation at every level.

Finally, the VAT should be zero rated at the border, but not the NBRT so that the NBRT can continue to have deductions for things like health care.

I would expand the range of deductions and credits for health care for workers, their families and retirees, with robust mental health care provisions (to replace incarceration of the mentally ill and addicted) as well as educational benefits at the state and federal levels for children and for new hires (with college students hired before junior year and their employers picking up the tab in exchange for tax benefits and a service commitment – which would be replaced by a marketable loan if the employment did not work out).

Most importantly, the child tax credit would shift to the NBRT from income taxation. Because of these tax payments, the NBRT would not be zero rated for exports, since the importing country benefits from services to employees and their families in a way that they don’t benefit from services provided to taxpayers through a VAT.