We retired Tax Justice Blog in April 2017. For new content on issues related to tax justice, go to www.justtaxesblog.org
The Committee for a Responsible Federal Budget, an organization “committed to educating the public about issues that have significant fiscal policy impact” and running several programs to address the budget deficit, issued a working paper last week calling for corporate tax reform that has no impact on the budget deficit.
The paper actually does a good job of laying out the issues and the options, explaining that a corporate tax rate reduction could be enacted without increasing the budget deficit so long as lawmakers choose to reduce or eliminate tax expenditures (tax loopholes and tax preferences) to offset the costs of lowering the rate.
But why would a deficit-hawk group not call for a more ambitious goal than simply avoiding an increase in the deficit? Doesn’t everyone agree that we should (eventually anyway) reduce the budget deficit?
Part of the problem may be that there is a lot of misinformation about the corporate income tax. Citizens for Tax Justice has as fact sheet and a report explaining why Congress should enact a corporate tax reform that is revenue-positive (that raises tax dollars). They address some of the common fallacies about corporate taxes.
For example, corporate leaders and their lobbyists sometimes claim that the corporate tax is ultimately borne by American workers, who pay the price when the tax pushes corporations offshore. This can be disproven by the research that finds the vast majority of the corporate tax to be borne by the owners of corporate stocks and business assets and by the common sense observation that corporations would not bother lobbying Congress to lower their taxes if they did not believe their shareholders were the people ultimately paying them.
CTJ is not alone in believing corporations should contribute more. Last year, a letter we circulated calling for revenue-positive corporate tax reform was signed by 250 organizations, including national groups and state-based groups in every state, before being sent to every member of Congress. The letter explains,
Some lawmakers have proposed to eliminate corporate tax subsidies and use all of the resulting revenue savings to pay for a reduction in the corporate income tax rate. In contrast, we strongly believe most, if not all, of the revenue saved from eliminating corporate tax subsidies should go towards deficit reduction and towards creating the healthy, educated workforce and sound infrastructure that will make our nation more competitive.
This year, Americans for Tax Fairness, the campaign formed by several national organizations (including CTJ) to raise awareness about revenue issues, decided that one of its basic principles is that “any corporate tax reform should require the corporate sector to contribute more in federal income-tax revenue than it does now, not less.”