Corporate tax collections are very low both in historical perspective and compared with other countries. This contributes to the overall low level of revenue.
The 2017 tax law (Public Law 115-97) is a major reason for this revenue loss, with its total cost likely to be even larger than was estimated when the law originally passed.
There is no evidence that the 2017 tax law has made a substantial contribution to investment or longer-term economic growth. In fact, business investment growth has slowed to nearly a halt while economic growth has been propped up by increases in government spending.
Going forward, a well-designed business tax reform could both increase revenue and encourage more investment and innovation.
TCJA has failed to live up to its promise of broadening the tax base on the foreign income of multinational corporations, which was the quid pro quo for a lower corporate tax rate.
Treasury has weakened these already generous features of TCJA in the face of intense lobbying for business interests, which will further erode the U.S. tax base. Troublingly, many of these regulatory giveaways have no statutory basis
Douglas Holtz-Eakin (American Action Forum), Testimony:
The jumping off point for the TCJA was a bipartisan agreement that the U.S. corporation income tax needed fundamental reforms;
The TCJA, while imperfect, addressed many of the most important elements that harmed the tax-competitiveness of U.S.-headquartered multinationals, and it improved the growth incentives overall; and
While there are limited data available this soon after the passage of the TCJA, there has been a U-turn on the loss of corporate headquarters, a dramatic shift in repatriated funds, and promising shifts in top-line economic growth, business investment, and wage growth.
Chye-Ching Huang (Center on Budget and Policy Priorities), Testimony:
Depletion of IRS Enforcement Is Undermining the Tax Code