Economists press for corporate tax reform

A group of 20 economists is calling on Washington to revamp the corporate tax code, saying it would spur economic growth in the United States.

The economists noted that recent bipartisan fiscal commissions had called for corporate tax reform, and that the current top corporate rate of 35 percent was the highest in the Organization for Economic Cooperation and Development.

“Economists recognize that reducing corporate tax rates can eliminate distortions to economic activity, such as locating a business abroad for tax reasons,” the economists wrote to the top tax writers in each chamber of Congress.

“In contrast, closing tax loopholes, which do not likely affect business decisions at the margin, can reduce tax avoidance, and thereby generate a broader tax base and more revenue for a given corporate tax rate.”

Kevin Hassett of the American Enterprise Institute, an economic adviser to Mitt Romney’s presidential campaign, was among the signers of the letter.

The current corporate rate, the economists said, made it harder for the U.S. to attract private-sector investment, and distorted how companies acted.

Top officials on both sides of the aisle have expressed an interest in overhauling the tax code – but serious partisan differences remain, leaving some observers skeptical that tax reform can happen anytime soon.

Both the Obama administration and congressional Republicans have called for corporate tax reform.

But the two sides disagree over whether more revenues are needed for deficit reduction. Republicans and some Democrats have also shown more interest in reforming the individual code than the administration.

The RATE Coalition, a group of major companies looking for a tax rewrite that lowers corporate rates, released a statement backing the economists’ letter.

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