Tags: Graetz | corporate | tax | consumption

Columbia's Graetz: Cut Corporate Taxes, Impose National Consumption Tax

By    |   Thursday, 17 July 2014 01:00 PM

The Obama administration is taking the wrong approach in attempting to stop U.S. corporations from moving their headquarters overseas to cut their tax burden, says Columbia University Law School professor Michael Graetz.

Instead, the government should reduce corporate taxes and establish a national income tax, he writes in The Wall Street Journal.

"At 35 percent, we now have the highest statutory corporate rate in the Organization for Economic Cooperation and Development (OECD), which has 34 developed countries," says Graetz, a tax-policy official during the George H.W. Bush administration.

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"And, unlike the U.S., the vast majority of OECD countries do not impose taxes when their companies reinvest their foreign earnings at home."

As for a consumption tax, the United States is the only OECD country that doesn't have one, Graetz notes. "Relying, as we do, so heavily on individual and corporate income taxes to pay for federal expenditures hobbles us in today's global economy," he argues.

"Political leaders from both parties should demonstrate their own economic patriotism. They need to stop just talking about tax reform."

Bloomberg View editors say U.S. corporations can't be faulted for fleeing overseas. "Lawmakers may be incensed, yet the fault is theirs," the editors write.

"Companies that reincorporate in low-tax countries are rational actors, not traitors." As Congress hasn't acted to cut corporate taxes, "frustrated executives are merely running their businesses in a tax-efficient way, as they're paid to," the editors notes.

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The Obama administration is taking the wrong approach in attempting to stop U.S. corporations from moving their headquarters overseas to cut their tax burden, says Columbia University Law School professor Michael Graetz.
Graetz, corporate, tax, consumption
257
2014-00-17
Thursday, 17 July 2014 01:00 PM
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