Andy Anderson always insisted that General Motors never paid a dime in corporate taxes. Those taxes were paid by ordinary folks who bought Chevy's and Oldsmobiles. It's a bit of an oversimplification but you get the point. Costs of doing business are passed on to consumers whether they are taxes or fenders or wages or bolts. For the record, passing on costs in the form of higher prices isn't nearly as easy in a global economy.
The President's Advisory Panel on Federal Tax Reform is charged with making specific recommendations on tax reform to the President. The Tax Foundation has weighed in on that question with a new "Fiscal Fact" warning panel members not to repeat several mistakes made during the last major U.S. tax reform in 1986.
As you may be aware, the Tax Reform Act of 1986 substantially reduced income tax rates and broadened tax bases. However, it also increased the tax burden on corporate taxpayers in an effort to fund reductions in the tax burden on individual taxpayers. According to the new analysis by Staff Attorney Chris Atkins, as the President and Congress consider options for reforming the tax code, they should avoid the temptation to use revenue neutrality as an excuse to redistribute the tax burden among Americans as was done during the 1986 reform.
The concern is that the US already has one of the highest combined corporate income tax rates in the civilized world and in an effort to appease individual taxpayers, an ever larger share of the tax burden will be shifted to the corporate level. In a global economy, that's just asking for trouble.
As fomer Internal Revenue Service Commissioner Fred Goldberg Jr. said in testimony to the President’s Advisory Panel on Tax Reform, “we cannot, absolutely cannot, hope to compete in a global economy by setting corporate taxes in a vacuum. We will get killed.” Nor can we “hope to compete in a global economy” if Congress once again insists on an individual-corporate tax shift similar to what happened in TRA-86.
This stuff is a huge snore but it's critically important because it affects all of us.
Of the 30 OECD countries only 2 have higher taxes.
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