Well-Designed, Fiscally Responsible Corporate Tax Reform Could Benefit the Economy

Publication Date: June 2008

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Aviva Aron-Dine

Research Area: Banking and finance

Keywords: Economic projections; Corporate finance; Tax code; Fiscal future

Type: Report

Abstract:

The corporate income tax appears to have joined the long list of tax issues likely to be addressed, or at least debated, over the next few years.

Over the coming decades, the United States is projected to face large fiscal difficulties. Rising health care costs and the aging of the population will make it a challenge to meet existing federal commitments, much less to make new investments in areas like covering the uninsured, early childhood health care and education, and science and technology. In this fiscal environment, those who seek to reduce the overall level of corporate revenues by cutting the corporate tax rate without broadening the tax base would need to show that the economic costs of current tax rates are large enough to warrant directing scarce resources toward corporate tax cuts rather than other priorities. This report finds that the economic evidence does not meet that burden of proof.