Corporate flat tax the way to go: Paper

Installing a 9 percent flat corporate tax rate would provide a significant boost to the economy, a new paper argues.

Laurence Kotlikoff, of the National Center for Policy Analysis, and the paper’s other authors say that sort of switch would keep U.S. revenue levels the same level, but also boost gross domestic product by 6 percent.

ADVERTISEMENT
Worker wages would also increase 6 percent in the short-term, before eventually hitting 9 percent.

The paper operates under the assumption that the average effective rate for U.S. corporations is 13 percent, far below the statutory rate of 35 percent.

Both House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.) want to reduce the 35 percent rate – Camp to 25 percent, and Baucus to below 30 percent. Such a reduction would require the scrapping of tax breaks to offset the costs.