Corporate Tax Reform: Is broadening the base and lowering the rate always a good idea?


In a Bruegel post today, Jeremie Cohen-Setton and I weigh in on simulations of the Romney tax plan, new thinking on capital income taxation, and corporate tax reform.

Base-broadening corporate tax reform

Both candidates have roughly similar corporate tax plans that broaden the base and lower the rate (while protecting the R&D credit). Governor Romney proposes reducing the corporate rate to 25% and President Obama proposes a slightly smaller reduction to 28%.

While lower rates and broader bases are often praised by tax analysts, some including Larry Summers have been skeptical in the past. A primary concern is that leveling the playing field – that is lowering rates of corporate taxation by getting rid of deductions such as accelerated depreciation – can put more of the burden on new investments rather than existing capital, which can reduce the attractiveness of new investment.

But Alan Auerbach recently offered a proposal for a…

View original post 64 more words

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar.
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