Sunday, April 11, 2010

Tax Reform that Works?

Congressmen Judd Gregg of New Hampshire and Ron Wyden of Oregon - two of my favorite pragmatic and rational problem solvers - are proposing a serious, and I mean serious, tax reform bill that makes so much sense, it will never pass. They propose to simply the tax code, eliminating thousands of deductions and offering three simple, progressive brackets. It also proposes lowering the corporate tax rate to a flat 24%. I am definitely intrigued.

However, while it proposes to be a deficit neutral bill, that quality will do nothing to alleviate a trillion dollar deficit and a $12 trillion debt. Additionally, the GOP-side continues to push the corporate rate change on a comparison to other countries - even though, because of deductions, most American corporations pay almost nothing in taxes as it is now. I don't see corporations giving up all their deductions and increasing their tax liability to 24%, but we will see.

With those problems, I don't see a lot of hope. But it's better than the status quo.


steven said...

Michael, the IRS Statistics of Income for Corporations reported the following for 2007:

Total Returns 5,868,849
Net Income $1,836,782,896
Tax After Credits $331,374,445

That's 18.04% corporate income tax on net income. Not peanuts. Corporations do pay income tax. The figures for 2006 were similar to 2007.

steven said...

By the way, Michael, those dollar amounts are in thousands. $1.836 trillion net income and $331 billion tax paid.