More on Corporate tax reform

My book Balancing the Budget is a Progressive Priority proposes putting the corporate rate to 0%, raising the top personal income rate above what it would otherwise be, and making dividends and capital gains normal income. This storify story brings together a tweet storm from @Jesse_Livermore and @RobAltieri1984 last night discussing the details of such a proposal. The bottom line from this discussion is that some other changes will be needed to capture for taxation the revenue flows from corporations.

Key issue is whether corporations would engage in share buy back in lieu of paying dividends. As always, the details are important….I will circle back to this later….and was also looking for an excuse to try out storify. As an aside, and a further reason for progressives and liberals to move their thinking in this direction is that making capital gains and dividends normal income (or at least moving the now preferential rate in that direction) would be the simplest way to address income inequality imaginable. As Newt Gingrich said in the debates to Gov. Romney, a wealthy person with no wages or normal income but only dividends can’t have an effective tax rate above 15%.

The most important tax reform question remains what percent of GDP do we intend to collect in taxes, to balance out (at least in the longer run) the spending regime that we have.