Yesterday, Senator Max Baucus (D-MT) and Representative Dave Camp (R-MI) kicked off their summer tour of the country in order to bring the tax reform debate to the American public. The tour started in St. Paul, Minnesota, and two former Minnesota Congressmen are excited that tax reform could be a real possibility.
The lead up to July 4th brought an exciting development in fiscal policy discussions: a commitment from Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) to use a "Blank Slate" approach in tax reform.
As the tax reform debate begins to heat up again, a new report released by the General Accountability Office (GAO) contributes some telling information regarding our outdated and inefficient corporate tax code. For tax year 2010, profitable corporations that filed a Schedule M-3 (those that have assets greater than $10 million) paid 12.6 percent of their reported worldwide income in U.S. federal income taxes.
In 2010 and 2011, the federal government "spent" nearly $50 billion in revenue on energy tax expenditures. But are these provisions actually achieving their stated goals? A new government report says no.
Among developed countries the US is unique in taxes in a number of different ways. One claim to fame is the fact that the U.S. now has the highest marginal corporate tax rate. The current marginal rate in the U.S. remains at 35 percent while the average marginal rate of the OECD countries, excluding the U.S., is a full 12 percentage points lower at 23 percent. At the same time, the revenue collected by the corporate tax is low by international standards due to the number of corporate tax provisions which make the effective rate not nearly as high.
According to press reports today, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) are about to take a very encouraging step on tax reform this morning, releasing a letter to their colleagues to inform them that the Committee will follow the Fiscal Commission's "Zero Plan" approach to tax reform this year.
The United States has the highest statutory corporate tax rate in the developed world, but substantial revenues are forgone through a variety of tax loopholes and provisions. Responsible corporate tax reform could lower statutory rates while simplifying the tax code and eliminating these loopholes.
Last week, the Senate Finance Committee released a seventh report in a series of papers examining the federal tax code and options for comprehensive tax reform reform.
Today, in a Project Syndicate piece, Laura Tyson examines the state of retirement saving in the U.S. and argues that many retirement saving tax expenditures are failing to achieve their goals. Many tax expenditures are designed to encourage actions that many lawmakers would argue are useful, like charitable donations and homeownership.