(Original Post)
By Bernie Becker - 11/07/11 05:59 PM ET
A group of economists is calling on the top congressional tax writers to lower the top corporate tax rate while eliminating a range of credits and deductions.
Officials from both sides of the aisle have heartily endorsed that broad idea for reform, while acknowledging that overhauling the tax code is a time-consuming and complex.
The 20 economists who wrote to the congressional tax panels – including Kevin Hassett of the American Enterprise Institute and Robert Crandall of the Brookings Institution – noted that bipartisan fiscal commissions had pressed for tax reform as well.
And, they signaled, revenue-neutral reform done right would entice more domestic and foreign investment and help the economy grow. “Economists recognize that reducing corporate tax rates can eliminate distortions to economic activity, such as locating a business abroad for tax reasons,” they wrote Monday to Sen. Max Baucus (D-Mont.), the Finance Committee chairman; Rep. Dave Camp (R-Mich.), the House Ways and Means chairman; Sen. Orrin Hatch (R-Utah), the Finance ranking member; and Rep. Sandy Levin (D-Mich.), the top Democrat on Ways and Means.
“In contrast, closing tax loopholes, which do not likely affect business decisions at the margin, can reduce tax avoidance, and thereby generate a broader tax base and more revenue for a given corporate tax rate,” the economists added.
While the deficit-reducing supercommittee have discussed tax reform, there has been wide skepticism that the 12 lawmakers on the panel could hash out an agreement to fully revamp the tax code. The supercommittee has just over two weeks to announce its recommendations.
Camp and others have also said that the corporate and individual codes need to be reformed together, because many businesses pay taxes through the individual code.
But while both Democrats and Republicans in Congress have called for a rate-reducing, base-broadening tax reform, some on the left, like Citizens for Tax Justice, have asserted that corporations are already adept at reducing their tax bill and should contribute more revenues to the federal government.