Let's Eliminate The Corporate Income Tax

Alan: I would be happy to conduct a "reversion to status quo ante" experiment in eliminating the corporate income tax. An even better idea is to eliminate the corporate income tax for those corporations which actually demonstrate that tax abolition produces dramatic increases in investment, productivity, job creation and real wages. Here's the downside. The abolition of corporate taxes would eliminate government's ability to use taxation as carrot or stick - rather like "going into a fight" with both hands tied. Instead, lower a corporation's tax rate only to the extent that it creates new jobs. The more jobs a corporation creates, the lower its tax rate - all the way down to zero. 

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"I, like many economists, suspect that our corporate income tax is economically self-defeating -- hurting workers, not capitalists, and collecting precious little revenue to boot.The fact that the marginal tax rate, whether 23 percent, 35 percent or somewhere in between, is so much larger than the average rate suggests that a sizable share of corporate profits and production is ending up overseas and untaxed. Making, rather than just stating, this case requires constructing a large-scale computer simulation model of the United States economy as it interacts over time with other nations' economies, and then seeing how the model reacts when you change the American corporate income tax. I've developed such a model with three colleagues through the Tax Analysis Center, a nonpartisan research group. Our findings make a very strong, worker-based case for corporate tax reform. In the model, eliminating the United States' corporate income tax produces rapid and dramatic increases in American investment, output and real wages, making the tax cut self-financing to a significant extent." Laurence J. Kotlikoff in The New York Times