Tuesday, July 19, 2022
George K. Yin (Virginia), A Brief History of U.S. Approaches to Corporate Tax Integration and Some Lessons:
This essay, to be included as a chapter in a volume on corporate taxation, briefly reviews U.S. efforts to achieve corporate tax integration, focusing especially on the Civil War years when enduring problems first surfaced and Congress approved four integration approaches in three years. The review highlights the important role corporate distribution policy has played in solving the integration puzzle. By distributing or retaining earnings, corporations can either advance or block integration objectives. Somewhat counterintuitively, the historical experience suggests the most feasible way to satisfy integration’s goals may be to retain two moderate and comparable, though separate, taxes on corporate income.
This chapter has described the nation’s long history of frustration trying to achieve the objectives of corporate tax integration. Somewhat counterintuitively, the historical experience suggests the most feasible way to satisfy Professor Seligman’s quest for “substantial justice” may be to retain two moderate and comparable, though separate, taxes on corporate income. Under this approach, reform of the corporate tax base would be an easily incorporated option for the future.