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A Better Way to Tax U.S. Businesses
The U.S. corporate tax code is broken. High rates and perverse incentives drive capital away from the corporate sector and toward other uses and countries. This is bad news for U.S. workers, because corporations aren't making investments that would increase productivity and real wages. And while one might think higher rates lead to higher revenues, the U.S. actually collects less in taxes (as a percentage of GDP) than most other developed nations. Desai, a professor at Harvard Business School and Harvard Law, believes a handful of changes could fix all that. A significant rate reduction and an end to foreign-income tax would encourage U.S. multinationals to keep more money at home. Any revenue lost could be offset by a small tax on noncorporate business income, which is now exempted. Closing the chasm between how income is reported on taxes and earnings are reported to investors would also raise revenue--and end public perceptions of unfairness. These reforms could actually turn the U.S. tax system into an asset. But they won't be effective if managers don't change their mind-set. Rather than shirking their tax obligations, they need to start viewing them as an important social responsibility.
Read the article here.
Read the working paper, "Reinventing an American Corporate Tax", here.
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Media
Don't Blame Apple for America's Broken Tax Code
24 May 2013 - Harvard Business Rview
Hard Business School's Mihir A. Desai, a answers a few questions about the recent Congressional tax inquiry of Apple and how this investigation fits into a larger debate about the corporate tax code.
Amid rancor, a chance for U.S. action on trade bill
23 May 2013 - Reuters
U.S. business groups are preparing to push for the bill, which would give the White House enhanced ability to negotiate trade deals and set out U.S. negotiating goals on issues ranging from cross-border electronic data flows to global supply chains and potentially even foreign currency practices.
New Study Shows U.S. Legal System is a Competitive Liability
22 May 2013 - New Study Shows U.S. Legal System is a Competitive Liability
The U.S. Chamber Institute for Legal Reform suggests that civil justice reform would play an important role in increasing the global competitiveness of American businesses.