[Can I repackage old blog content as new content? Yes. Will you read it?]
Why Now?: Corporate Tax Reform
Today’s FT is filled with stories on pressure to crack down on tax havens and calls for reform of OECD corporate taxation. Why now?
The timing of policy choices, from government expropriations of foreign investment, the signing of trade agreements, to the iniation of intermational conflict are some of the toughest questions in international relations.
I’m curious why is there so much pressure to enact corporate tax reform. A few quick thoughts
- NGOs and journalists have broken a number of high profile stories on corporate tax reform. This is plausible, but I know of of at least one other major investigation from the early 1990s by Time Magazine.
- Companies have gone too far in their ability to dodge taxes. This is plausible, and there is some evidence that effective tax rates have declined over time.
- Fiscal pressures are forcing governments to make major tax and spending reforms, often calling for some sacrifice by numerous groups in society. Governments simply can’t ignore corporate tax reform if they are going to make major changes to their tax systems.
These are just some quick thoughts while my newborn naps. Thoughts?
Comments
Dodge? A little pejorative. Anyone who deducts mortgage interest, claims a dependent exemption or benefits from employer provided health insurances also is dodging taxes. To your actual point, foreign tax aspects of the Internal Revenue Code are unbeleivably complicated. It causes unnecessary uncertainty and high compliance costs. In my experience, business like certainty even if a little more expensive. If reform will make things simpler, and more consistent, I think revenue will actually improve.