Reforming the Corporate Income Tax

There’s an interesting post at RealClearPolicy on reforming the corporate income tax. The claim in the post is that there’s a consensus among Congressional Republicans and Democrats about the direction of the reforms that are necessary but I have my doubts. I think there are a lot of Senate Democrats who believe that the corporate income tax needs to be a lot higher and, especially, don’t want to run for re-election after having lowered the corporate income tax.

I’m not as concerned about the complication of reforming the taxes on S-corps and partnerships as the author despite their representing such a large proportion of total corporate income (55%). Many of those S-corps and partnerships are financial concerns and professional firms and the amount of income they represent is an artifact of the tax system we want to reform. You can’t reform an entire economy just by changing the corporate tax code.

I’d be happy if we just brought our tax system more in line with that of other OECD countries. That will require giving ground not just on rates but on the territorial issue and, frankly, it’s hard for me to see the present Senate Democrats doing that.