Corporate and International Tax Reform: Long-, Medium-, and Short Term Proposals
Reuven S. Avi-Yonah
University of Michigan Law School
July 1, 2009
U of Michigan Law & Economics, Olin Working Paper No. 09-015
U of Michigan Public Law Working Paper No. 157
The current controversy surrounding President Obama’s international tax proposals seems like an opportune moment to try to consider them in context. How do these proposals fit in with an agenda for US corporate and international tax reform?
Few observers doubt that such reforms are sorely needed, for several reasons. First, the long-term budgetary outlook is unsustainable. Second, the US corporate tax rate is among the highest in the OECD. Third, the current system raises relatively little revenue and large amounts of corporate income go untaxed. Finally, the system is horrendously convoluted and imposes high transaction costs.
This paper will attempt to raise some proposals for US corporate and international tax reform. It will begin by asking why we need to tax corporations at all, since the rationale for the corporate tax is important for assessing reform proposals. It will then discuss options for corporate and international tax reform, beginning with long-term options (a 10 year horizon), continuing with the medium term (2-5 years) and concluding with short-term options like the Obama proposals (1-2 years).
Number of Pages in PDF File: 9
Keywords: tax reform, corporate tax, international tax
JEL Classification: H25
Date posted: July 8, 2009 ; Last revised: August 21, 2009
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