Corporate Tax Reform: Taxing Profits in the 21st Century

Cut the Rate!The Easy, and Most Important, Part of Reform

Sometimes the corporate tax’s tortuous tangle of rules and regulations can distract us from its most important feature: the tax rate. Unlike most everything else in corporate tax law, it is simple to understand. You can actually talk about it to regular people and they won’t look at you like you’re from Mars. And if lawmakers want to change it, all they have to do is adjust a few digits in the code, like resetting the temperature on your home thermostat.

It may be simple, but it is also a powerful policy tool. Currently the rate is 35 percent. If corporate capital is yielding 10 percent ...