Bush Administration Says Lower the Corporate Rate; CTJ Says Use the Revenue for More Pressing Priorities
Earlier this summer, the Bush Administration floated the idea of closing corporate tax loopholes and using the resulting revenue to offset a reduction in the corporate tax rate. There is even a possibility that a tax bill being developed by House Ways and Means chairman Charles Rangel (D-NY) could include some variation on this theme to win Republican votes. A recent op-ed by CTJ director Robert McIntyre argues that the first half of this plan is a great idea -- close the loopholes that allow corporations to avoid paying their fair share. But there are many pressing needs (healthcare, Social Security, paying off the national debt or just closing the budget deficit during a costly war) that this revenue could be used for rather than a rate reduction for corporations.
And it's not the case that corporations are paying so much in U.S. taxes that it puts them at a competitive disadvantage. In 2005, the most recent year for which data are available, U.S. corporate tax revenue as a share of GDP was only 2.6 percent, lower than in all but two developed countries.