Tags: Summers | corporate | tax | burden

Summers: US Tax System Is Burdening Working Class

By    |   Thursday, 02 October 2014 01:22 PM

While the United States has the highest corporate tax rate in the developed world, up to 35 percent at the federal level, companies have figured out more and more ways to avoid taxes.

And that's a problem, says Harvard economist Larry Summers, a former Treasury secretary.

"A combination of greater economic integration and more income accruing to intangibles like intellectual property, which by nature are hard to locate, does raise profound questions for the future of taxation," he tells The New York Times.

"It is a significant problem for the revenue capacity of states and an immense problem for their capacity to maintain progressive taxation."

The ability of the wealthy to minimize their personal tax payments represents a problem too, Summers notes.

"Consider a superstar banker, an enormously valuable pharmaceutical patent, a terrific entertainer, an assembly line worker and a teacher. Of all those things, which is the least mobile?" he asks. "A tax system that can't reach the mobile is a tax system that is going to burden working people."

Meanwhile, David Neumark, an economist at University of California, Irvine, advocates increasing the earned income tax credit as a substitute for raising the minimum wage.

"Minimum wages are ineffective at helping poor families because such a small share of the benefits flow to them," he writes in The Wall Street Journal.

Increasing the Earned Income Tax Credit would be more helpful, Neumark says, because it "directly targets low-income families, rather than low-wage workers."

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While the United States has the highest corporate tax rate in the developed world, up to 35 percent at the federal level, companies have figured out more and more ways to avoid taxes.
Summers, corporate, tax, burden
246
2014-22-02
Thursday, 02 October 2014 01:22 PM
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