The ayes have it. Our panel of tax and accounting experts, whose opinionated essays are gathered here, voted 3-1 in favor of a major cut in the federal corporate income tax rate.

Hands cut money on plate, reduce funds conceptBut whether congressional Republicans will have better luck fashioning a new corporate tax structure than they’ve had coming up with an alternative health-care scheme remains to be seen. Many of their opinions are reflected in this package of essays. For example, they believe the existing tax rate makes it tough for big multinational companies to compete globally unless they practice tax avoidance by parking large amounts of cash overseas, where corporate tax rates are almost universally lower than they are in the United States.

And, they say, lowering the rate would stimulate new corporate investment, job creation, and GDP growth.

Valid points all. At the same time, no one should pretend that a seismic shift in something as complex as economic policy can’t trigger a trove of negative consequences, foreseeable and unintended alike.

Will lower taxes really pay for themselves by boosting productivity or will they only make the federal deficit worse? Will companies really use a new cash windfall for investment, or continue socking away their record profits? Might a big tax cut for corporations even serve to worsen income inequality between the wealthy and the middle class? And if so, what might be the long-term societal consequences?

No matter what Congress and President Donald Trump do, or don’t do, with corporate taxes, there will be loud opposition. We know companies want to be taxed at a lower rate. Let’s hope, if indeed a big cut is on the horizon, that the net result will be positive not only for them, but for other stakeholders as well.

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4 responses to “Square-Off: What Corporate Tax Rate Is Best?”

  1. So, somehow helping “multi-national” companies is magically going to create more jobs in the U.S.? We’re supposed to trust that these companies, who’ve acknowledged they employ tax avoidance schemes, to use their tax cuts to create jobs here? If we are in love with “higher productivity” someone has to understand that translates to fewer, not more jobs. Lowering Corporate Taxes, without some sort of guarantee that it will result in a net increase in jobs, is almost slam dunk that the real beneficiaries would be corporate investors, and executives.

  2. There is a very sad fact that relates to all of the debates regarding corporate taxes and that is that corporations never have and never will be the real taxpayers. If you can read an income statement it becomes very obvious that when a corporation makes money that which is called “taxes” are 100% paid for by their customers who in the end are always the consumers. All costs are added into the price of their products. Corporations never have and never will be taxpayers. CPA’s, like myself, have the basic skills necessary to read financial statements and if questioned would support this fact. Whether or not the others in this world ever will learn how to read financial statements is doubtful. However, the proper fix to this tax mess would be to totally eliminate corporate taxes and only have them become the primary tax collectors for all forms of government via sales taxes. These collected taxes would never appear on their income statements but only their
    balance sheets as a current liability. Think about this fix. What would really happen is that once the real taxpayers are aware of their encumbrances there could be a real revolution in the making.

  3. As the Controller for the US Division of an EU Company, it amazes me how myopic the discussion on corp. tax rates is (both from a political and corporate spectrum). Corp Taxes are only one component of taxes that a corporation pays. For example, and this is a REAL LIFE example; our EU counter-parts pay a much higher payroll tax that go to socialized health care, retirement and even free college. They also pay wages that cover an ADDITIONAL FOUR WEEKS of PAID vacation, on average, than a US comparable US worker might receive. So, EU Corps do pay higher taxes, yet on a DIFFERENT line item on the P&L. While corp taxes are lower in the EU, Plain and Simple, taxes ARE paid, its just geography on the P&L. And this conversation doesn’t even consider property tax rates. To consider these taxes holistically would ruin the myopic corp tax rate narrative. And one more note, the “Laffer Curve” would be better renamed the “Laugher Curve”; trickle down is a joke. The volume of corp cash sitting off-shore, if repatriated at lower rates, would NOT primarily be used to fund cap-ex and other pro-growth agendas…more likley it will be used to fund share repurchases and other shenanigans to prop up stock prices and continue perpetauting payoffs to the executives and institutional share holders.

  4. Eaking out a greater and greater share of each dollar of revenue by continually cost cutting through reduction in human labor costs, will ultimately have a negative impact on demand in the long run. If we lower taxes it’s unlikely in my estimation that corporate America will do anything other than return savings to shareholders given the lack of adequate investment opportunities available in the economy today for these large corporates. Even in situations where a positive capital investment is discovered, finding qualified employees today is extremely difficult.

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