TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, April 13, 2017

Hanna Presents The Theory And Reality Of Business Tax Reform Today At Georgetown

HannaChristopher Hanna (SMU; Senior Policy Advisor for Tax Reform, Senate Finance Committee) presents The Theory and Reality of Business Tax Reform at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

The last several years has seen a lot of discussion among policymakers as to reforming the tax code. On the individual side, there is very little agreement on what form tax reform should take. For example, some policymakers would like to eliminate a number of exclusions, deductions and credits thereby broadening the income tax base and coupling that with a reduction in the individual statutory tax rates. Others would like to shift the current tax system to a consumption-based tax system through, for example, enactment of a value-added tax or an exemption of capital income from the tax base. Some policymakers would simply like to retain the current individual income tax system, particularly after the enactment of a higher individual statutory tax rate as part of the fiscal cliff deal in early 2013.

While there is little agreement on the individual side, there seems to be near unanimous agreement on the business side that the statutory corporate tax rate is too high and needs to be significantly reduced. There also seems to be widespread agreement that the current international tax system needs to be substantially reformed. Although there is widespread agreement in both corporate America and policymakers as to reducing the corporate tax rate and reforming the U.S. international tax system, there has been very little movement in doing so. As a result, business tax reform has been at a standstill for a number of years. Corporate integration, however, which is the concept of integrating the individual and corporate level tax systems into one system, if structured properly, could help break the business tax reform logjam in a bipartisan manner.

Corporate integration has been discussed by tax scholars and policymakers for many years. It has been strongly supported by both groups; however, corporate America has been traditionally lukewarm to corporate integration. If structured properly, corporate America could strongly support corporate integration. With the backing of both corporate America and policymakers on both sides of the aisle, corporate integration could be enacted achieving the goals of reducing the corporate tax rate and reforming the U.S. international tax system.

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