Replace the Corporate Tax with a Market Capitalization Tax

Abstract:     
This proposal would replace the 35 percent corporate tax on publicly traded companies with a low 20-basis point quarterly tax on the issuer on the market capitalization including both traded debt and equity.A low-yield corporate tax would remain for corporations that are not publicly traded, and for a transition period, the tax would apply to publicly traded corporations to allow tax credits.

The proposal is made as a part of the Shelf Project, a collaboration by tax professionals to develop and perfect proposals to help Congress raise revenue. Shelf Project proposals are intended to raise revenue without raising tax rates, because the best systems have taxes that are unavoidable to reach the lowest feasible tax rates. Shelf Project proposals defend the tax base and improve the rationality and efficiency of the tax system. A longer description of the Shelf Project is found at ‘‘The Shelf Project: Revenue-Raising Proposals That Defend the Tax Base,’’ Tax Notes, Dec. 10, 2007, p. 1077, Doc 2007-22632, or 2007 TNT 238-37.

Copyright 2007 Calvin H. Johnson.

Number of Pages in PDF File: 7

Keywords: corporate tax, market capitaliztion tax, tax

JEL Classification: H20

Accepted Paper Series