The Economics of Corporate and Business Tax Reform

36 Pages Posted: 25 Feb 2016 Last revised: 27 Apr 2016

Multiple version iconThere are 2 versions of this paper

Date Written: February 1, 2016

Abstract

The reform of corporate and business taxation is central to current tax policy debates in the United States. This paper provides a framework for analyzing reform proposals by describing the lessons from current economic research for business tax reform, addressing both international and domestic reforms within a unified perspective. The paper begins by identifying ten potential inefficiencies created by the current corporate tax regime. It then discusses three classes of reform proposals. The first involves a substantially lower corporate tax rate and a territorial regime. The second is a formula apportionment system. The third category includes a destination-based cash flow tax. The paper evaluates each of these proposals in the light of the framework introduced earlier. It concludes that the relatively modest reforms currently under discussion would address only a few of these margins. In contrast, more fundamental reforms would eliminate all or most of the inefficiencies of corporate taxation.

Keywords: Corporate tax; Business taxation; International taxation; Tax reform; Territorial taxation; Formula apportionment; Cash flow tax

JEL Classification: H25; F23

Suggested Citation

Dharmapala, Dhammika, The Economics of Corporate and Business Tax Reform (February 1, 2016). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 757, Available at SSRN: https://ssrn.com/abstract=2737444 or http://dx.doi.org/10.2139/ssrn.2737444

Dhammika Dharmapala (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
188
Abstract Views
941
rank
77,512
PlumX Metrics