# What Would Happen if We Eliminated Corp Tax **URL:** \ **Category:** Great Debates\ **Created:** [June 20, 2010, 6:13pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887 "2010-06-20T18:13:35Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [June 21, 2010, 12:16am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/21 "2010-06-21T00:16:53Z")
> [@IdahoMauleMan](#): > > Of course. > > But if you agree that 100% tax rates will generate zero revenue, that means that revenue must go down to zero if rates keep being raised past some optimum point. > > Do you agree? Cool! So you want us to raise the corporate tax rate until we reach the optimum point? Sounds kinda leftish to me. ---
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [June 21, 2010, 12:17am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/22 "2010-06-21T00:17:50Z")
Okay, I put it in a spreadsheet and you were right and I was wrong. With your percentages they do end up increasing their price by slightly more than they end up paying in taxes. I was thinking about them chasing after the 30% and of course never catching up. It wasn’t obvious to me to do what you suggest. I was distracted when I responded to your previous post and didn’t look at the math too closely. What can I say, I’m not an accountant. It still remains true that prices are not driven solely by costs. Competition or consumer resistance can sometimes make it difficult to pass on all of the increases to consumers. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [June 21, 2010, 12:22am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/23 "2010-06-21T00:22:50Z")
> [@DanBlather](#): > > Cool! So you want us to raise the corporate tax rate until we reach the optimum point? Sounds kinda leftish to me. Nice. Way to go, skirting the issue and evading the central debating point. Classic SDMB technique. It’s usually the last refuge of those who are staring the obviousness of their incorrect position squarely in the face. I’ve given one real-life example above of an honest, actual case where the US govt is losing revenue by having a high corporate tax rate relative to other investment options. If the US tax rate was reasonable, we would bring our $$ home and add capacity to our plant in Oklahoma. But we aren’t, because the incentives are present to invest elsewhere. And that is the whole point. You don’t even need to believe my example above, if you don’t want to. If the US taxes marginal income at 39%, and country X taxes marginal income at 15%, and all other variables are equal, where would you invest your money? Is this so hard to figure out? ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [June 21, 2010, 12:25am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/24 "2010-06-21T00:25:56Z")
> [@Grumman](#): > > The reason this is wrong is because the company can take this into account, and aim a little higher, for a 30% + 9% + 2.7%… increase. Eventually this will come out to 142.86% of the desired after-tax profit, or 100% / 70%. Which would, one one expect, reduce their volume of product sold. Your math works only if the company’s selling a product where demand is totally unconnected to price. An increase in corporate tax cannot be avoided through price hikes, but the extent of effect will vary from product to product and market to market. There’s no one mathematical answer to the question. ---
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [June 21, 2010, 12:46am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/25 "2010-06-21T00:46:25Z")
> [@RickJay](#): > > Which would, one one expect, reduce their volume of product sold. Your math works only if the company’s selling a product where demand is totally unconnected to price. > > An increase in corporate tax cannot be avoided through price hikes, but the extent of effect will vary from product to product and market to market. There’s no one mathematical answer to the question. This is the crux of it. Mathematically, I was wrong and Al Bundy and Grumman were correct, but there are real world forces beyond this simple math. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [June 21, 2010, 1:29am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/26 "2010-06-21T01:29:53Z")
> [@IdahoMauleMan](#): > > Nice. Way to go, skirting the issue and evading the central debating point. Classic SDMB technique. It’s usually the last refuge of those who are staring the obviousness of their incorrect position squarely in the face. > > I’ve given one real-life example above of an honest, actual case where the US govt is losing revenue by having a high corporate tax rate relative to other investment options. If the US tax rate was reasonable, we would bring our $$ home and add capacity to our plant in Oklahoma. But we aren’t, because the incentives are present to invest elsewhere. > > And that is the whole point. You don’t even need to believe my example above, if you don’t want to. > > If the US taxes marginal income at 39%, and country X taxes marginal income at 15%, and all other variables are equal, where would you invest your money? > > Is this so hard to figure out? But of course that is never the only variable. You look at cost of transportation, labor force, political stability, cost of land, the regulation environment, other taxes (VAT, e.g.), and a host of other factors. Even if in your one case a business located elsewhere that does not mean that overall the tax revenues will be lower than if you dropped the rates. I think that of you look at tax rates in Europe you will see that there are much higher payroll taxes paid by companies. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [June 21, 2010, 1:34am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/27 "2010-06-21T01:34:24Z")
And wait, what do I [see](http://www.independent.co.uk/opinion/letter-europes-payroll-taxes-cost-jobs-1503721.html): > [@](#): > > Employers in continental Europe already carry social costs twice those of America and Japan. The simple fact is that payroll taxes cost jobs. We could do better by following America’s example. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [June 21, 2010, 2:27am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/28 "2010-06-21T02:27:30Z")
[http://www.rand.org/publications/randreview/issues/summer2008/horizon02.html](http://www.rand.org/publications/randreview/issues/summer2008/horizon02.html) As I said corporate tax rates in America have been dropping steadily for over 50 years. Here is a rand site that can even be understood in Idaho. ---
**Author:** ![amarone](https://avatars.discourse-cdn.com/v4/letter/a/e0b2c6/32.png) [@amarone](https://boards.straightdope.com/u/amarone)\ **Post date:** [June 21, 2010, 3:40am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/29 "2010-06-21T03:40:02Z")
> [@IdahoMauleMan](#): > > I’ve given one real-life example above of an honest, actual case where the US govt is losing revenue by having a high corporate tax rate relative to other investment options. If the US tax rate was reasonable, we would bring our $$ home and add capacity to our plant in Oklahoma. But we aren’t, because the incentives are present to invest elsewhere. I will add another example - I used to work for a British/American company. Because UK corporate tax rates are lower than US, we managed the company to maximize the amount of profit we could legally take in the UK. Every dollar of profit made in the UK rather than the US is a dollar on which the US government collected 0% in taxes. Had the US had lower corporate taxes, we would have been channeling profit in the opposite direction. And two more examples. I am currently reading [Fool’s Gold](http://www.amazon.com/gp/product/1439100136/ref=oss_product), which is not about taxation, but it was mentioned that US banks set up operations in London because of lower corporate taxes. And the fancy derivative shelters were set up in places like Bermuda because of lower taxation. So US banks created jobs in the UK and other places because of US taxation. Had US corporate taxes been zero, as per the OP, you can bet those jobs would have been created in the US. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [June 21, 2010, 3:44am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/30 "2010-06-21T03:44:39Z")
> [@amarone](#): > > I will add another example - I used to work for a British/American company. Because UK corporate tax rates are lower than US, we managed the company to maximize the amount of profit we could legally take in the UK. Every dollar of profit made in the UK rather than the US is a dollar on which the US government collected 0% in taxes. Had the US had lower corporate taxes, we would have been channeling profit in the opposite direction. > > And two more examples. I am currently reading [Fool’s Gold](http://www.amazon.com/gp/product/1439100136/ref=oss_product), which is not about taxation, but it was mentioned that US banks set up operations in London because of lower corporate taxes. And the fancy derivative shelters were set up in places like Bermuda because of lower taxation. > > So US banks created jobs in the UK and other places because of US taxation. Had US corporate taxes been zero, as per the OP, you can bet those jobs would have been created in the US. You can bet that whomever is doing the math on lowering corporate rates isn’t going to be bright enough to consider the 2nd-order effects you mention above. Namely, increases in employment (which increases income taxes) and the multiplier effect of increased employment (sales taxes, etc.). One of the quickest ways to increase employment in this country would be a permanent, significant reduction in corporate taxes combined with voluntary SS enrollment and elimination of the retarded distortions that keep US profits overseas. All of that capital would be available for investment and job creation in the US. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [June 21, 2010, 3:46am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/31 "2010-06-21T03:46:25Z")
> [@gonzomax](#): > > [http://www.rand.org/publications/randreview/issues/summer2008/horizon02.html](http://www.rand.org/publications/randreview/issues/summer2008/horizon02.html) > As I said corporate tax rates in America have been dropping steadily for over 50 years. Here is a rand site that can even be understood in Idaho. Who lives in Idaho? ---
**Author:** ![amarone](https://avatars.discourse-cdn.com/v4/letter/a/e0b2c6/32.png) [@amarone](https://boards.straightdope.com/u/amarone)\ **Post date:** [June 21, 2010, 3:50am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/32 "2010-06-21T03:50:42Z")
> [@Grumman](#): > > This is backwards. Company tax is paid on profit _before_ it is available for reinvestment. No it isn’t. If I take some of our revenue and invest it back into the company by hiring more people, for example, that is an operating cost that is deducted from gross profit, thereby generating lower net profit, on which taxes are paid. If I invest in plant or machinery, it is a little more complicated. I can only depreciate that cost over several years. If the depreciation schedule is 5 years, for example, then I can only offset 20% of the cost against profit in the first year (and each subsequent year, for that matter). The cost is still deducted from profit before taxes, but is now spread out. This means that you have to plan cash flow as you lay out the money without getting most of the tax benefit until later years. This can mean that high corporate tax rates can depress investment. Let us say that you wish to invest $100k but must depreciate over 5 years. In year 1 you pay out $100k and can knock off $20k off profit. Hence you effectively pay tax on the remaining $80k. At a corporate rate of 40%, you have had to pay out $132k in the first year in order to make a $100k investment. In year 2 you pay out nothing but get to knock another $20k off profits for that year before taxes. So $8k comes back to you. After 5 years you have got back all your tax on the $100k, leaving your total outlay as $100k. However, you can see that the initial cost was $132k, which makes it harder to find the money to invest. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [June 21, 2010, 5:42am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/33 "2010-06-21T05:42:20Z")
> [@IdahoMauleMan](#): > > All of that capital would be available for investment and job creation in the US. Do you have any grasp at all of what is going on? We are awash in capital and have tons of excess capacity, we just don’t have the demand. Shifting the tax burden onto consumers will make things worse. Partly that is because the investments people made are tanking. This supply side gibberish is so 80s. Maybe we can get MC Hammer as Secretary of Commerce. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [June 21, 2010, 5:43am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/34 "2010-06-21T05:43:25Z")
Getting back to the OP; > [@](#): > > First, I am not a tea party, anti-tax sort. What would happen to tax revenue if we eliminated corporate taxes? At some point the money saved in taxes would be paid to individuals through income, disbursements, dividends, and/or capital gains . Many of those individuals have a higher marginal tax rate than the corporation. Could it end up being a wash, or even an increase, in Federal tax revenue (in the long term)? If I’m understanding you correctly, you’re saying we should pass the money on untaxed to people who have a higher tax rate. That way the government would collect higher overall revenue. It’s possible but not certain. Taxing both corporations and individuals can allow a “double dipping” effect. For example, let’s say that corporations pay 10% tax and individuals pay 20% tax. And we’ll assume that all of a corproations money either goes to taxes or to individuals. Let’s start with the corporation having a million dollars. That gets taxed and the government collects $100,000. The remaining $900,000 gets distributed to individuals, who will then pay $180,000 in taxes. The government overall collected $280,000. Now suppose we decided to abolish the corporate tax. All of the money would be passed on to individuals who would pay the higher 20% rate. Start with the corporation having the same million dollars. It pays no taxes and passes the entire $1,000,000 on to individuals. And those individuals pay $200,000 in taxes on it. In other words, the government lost $80,000 in revenue. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [June 21, 2010, 6:48am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/35 "2010-06-21T06:48:54Z")
> [@Little\_Nemo](#): > > Getting back to the OP;If I’m understanding you correctly, you’re saying we should pass the money on untaxed to people who have a higher tax rate. That way the government would collect higher overall revenue. > > It’s possible but not certain. Taxing both corporations and individuals can allow a “double dipping” effect… > … > Start with the corporation having the same million dollars. It pays no taxes and passes the entire $1,000,000 on to individuals. And those individuals pay $200,000 in taxes on it. In other words, the government lost $80,000 in revenue. I’m not proposing, just wondering. What a great analysis, it makes sense ---
**Author:** ![MrDibble](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mrdibble/32/114_2.png) [@MrDibble](https://boards.straightdope.com/u/MrDibble)\ **Post date:** [June 21, 2010, 10:54am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/36 "2010-06-21T10:54:55Z")
> [@IdahoMauleMan](#): > > A 100% tax rate will collect zero dollars, since there are no incentives to do anything if the government will take everything you earn. > > Correct, so far? Do you agree? I disagree. Profit is not the only incentive to do things. I don’t think an absolute $0 return for a 100% tax rate is accurate. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [June 21, 2010, 11:27am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/37 "2010-06-21T11:27:30Z")
> [@MrDibble](#): > > I disagree. Profit is not the only incentive to do things. I don’t think an absolute $0 return for a 100% tax rate is accurate. But it’s going to be pretty damn close, don’t you think? Put yourselves in the shoes of an investor who is being approached by a bank, VC fund, PE fund, mutual fund, public company seeking to sell shares, or even a private individual looking to start a business, expand a plant, fund a product idea, or buy property for development. “We’d like some of your money to \” “That sounds great. What is my expected return?” “Nothing. You will get nothing if this all works out and is successful according to plan. The government will take everything.” “Sure! Sign me up! I suppose I could use that money for consumption or to send overseas. Instead, I’ll give it to you…and at best, hope for a 0% return.” ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [June 21, 2010, 11:32am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/38 "2010-06-21T11:32:18Z")
> [@Grumman](#): > > As I understand it, the principle in post #5 is a failure to understand extremely simple maths. > > If I get your reasoning, you’re saying that if you introduced a 30% tax on a company with a profit of $100,000 (reducing the company’s share from $100,000 to $70,000), the company can’t just increase their before tax profit margin by 30% to compensate (since they’d have to pay another $9,000 tax on the additional $30,000). Is this correct? > > The reason this is wrong is because the company can take this into account, and aim a little higher, for a 30% + 9% + 2.7%… increase. Eventually this will come out to 142.86% of the desired after-tax profit, or 100% / 70%. See “price elasticity”. Customer’s willingness to pay higher prices is not the same for all products. Ergo, an increase in taxes can not always be 100% passed on to the customers. > [@MrDibble](#): > > I disagree. Profit is not the only incentive to do things. I don’t think an absolute $0 return for a 100% tax rate is accurate. People would only do whatever work they felt like doing whenever they felt like doing it. > [@DanBlather](#): > > Do you have any grasp at all of what is going on? We are awash in capital and have tons of excess capacity, we just don’t have the demand. Shifting the tax burden onto consumers will make things worse. Partly that is because the investments people made are tanking. This supply side gibberish is so 80s. How are we awash in capital? We were awash in capital that was used to fund companies that didn’t produce anything, buy homes people couldn’t afford, and invest in complex derivatives no one could understand. Now we are awash in unpaid debt no one wants to eat. The other problem is that we are experiencing is low job growth. High taxes, high wages, unions, and so on often makes it more competetive for businesses to go elsewhere, ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 21, 2010, 6:07pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/39 "2010-06-21T18:07:15Z")
> [@DanBlather](#): > > First, I am not a tea party, anti-tax sort. What would happen to tax revenue if we eliminated corporate taxes? At some point the money saved in taxes would be paid to individuals through income, disbursements, dividends, and/or capital gains . Many of those individuals have a higher marginal tax rate than the corporation. Could it end up being a wash, or even an increase, in Federal tax revenue (in the long term)? > > Some of the problems I see is that it allows the owners/stock holders to “hide” income within the corporation, but eventually it has to be disbursed somehow. Well people have objected to the double taxation implicit in a corporate income tax and I can see how that might bother some people. First, one reason for a corporate level tax is that if the owners of the corporation are not subject to US tax, then you can have a corporation making tons of money here without any taxes being paid. For example, Samsung is largely owned by Koreans and yet they earn a LOT of money here in the US. If we did not have a corporate tax, then income earned here in the US would never be taxed. Another point to consider is that the tax on dividends and capital gains is only 15%, if we got rid of the corporate tax, it would be a windfall to people who have dividend and capital gains income so the income is actually never taxed at a higher marginal tax rate, it would be taxed a a much lower marginal tax rate. Deferring income in corporations is (as you point out) is a problem but it is not merely a timing issue as you assume. There are people who build up small businesses and when it comes time to sell their business to megacorp, they engage in all sorts of tax planning, and frequently people are willing to give up their citizenship and move to some tax shelter country in order to avopid paying txes on the gains that have built up in their company. I’ve also seen it with executives that retire with large stock option positions. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 21, 2010, 6:41pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887/40 "2010-06-21T18:41:50Z")
> [@IdahoMauleMan](#): > > Just like your cite that indicated that the Bush tax cuts favored the wealthy by providing a cite that showed how the wealthy ‘saved’ more $$ after the tax changes than the poor…which was the only mathematical result possible, since the poor weren’t paying any taxes to begin with. I spend more time than most people looking at tax statistics and reading the tax code and the bush tax cuts were without a doubt more beneficial for the wealthy than for the middle class (especially the upper middle class). This if from memory but I beleive the top 0.1% carried a smaller portion of the overall tax burden than they had previously while the next 10% carried more. You can’t get blood from a stone so noone really tries to tax the poor aynmroe (although i would say that it in a democracy where most of our discretioanry spending comes from the income tax, it is important that EVERYONE pay some income tax). > [@](#): > > That is not the same thing as corporate tax rates. Corporate tax rates are lower than they have been gistorically. Effective corporate tax rates are lower than they have been in recent history. > [@](#): > > Arthur Laffer has spent a lifetime explaining this influence for personal income tax rates. What do you think would happen if we raised corporate tax rates to 90%? Is anyone proposing a 90% tax rate? Do you think the laffer curve applies equally to corporations as it does to individuals? Corporations might try to shift their income to lower income jurisdictions but unlike people, corporations aren’t making a tradeoff between work and leisure. > [@](#): > > Would we just sit back and collect more money? In the case of indivudals we would in fact collect mroe money right up to (and probably past) a 50% tax rate). > [@](#): > > You don’t think any incentives would be changed by that policy? Sheesh. Once again if people were proposing a 90% marginal tax rate, you might have a point, as things stand, I think youa re setting upa straw man. > [@](#): > > Take a look at page 22. The US marginal rates are among the highest in the world. In addition, the US has some of the most bizarre, distortionary laws on the books regarding income earned in foreign countries. The net effect of which is to actually _discourage_ job growth and investment in the US, by creating dis-incentives to repatriate the income (because then it would be taxed at a punitive rate). I think you need to take a better look at subchapter F of the income tax code. The US is somewhat different than other countries in that it taxes worldwide income, it has done so for almost 100 years. One thing the US doesn’t do is tax that foreign earned income the year it is earned, they tax it when it is repatriated (I believe this comes from an outdated mentality and we should either tax foreign income immediately or not tax it at all) but the rate is not punitive (the rate is no higher than the rate for domestically earned income). > [@](#): > > It’s a shame, but hey…don’t blame us. We’re just making a sensible business decision. Blame your Socialists-In-Office. Pardon me? The tax law has said basically the same things for decades, what are you trying to say here? If I understand teh opabma proposals correctly , then at least on idea is to remove the disincentive by taxing all that income regardless of whether or not you repatriate the money so that there is not incentive to keep the money out. I think the better answer would be to stop trying to tax income earned by Exxon in other countries and focus more on teh allocation and sourcing of income. > [@](#): > > That may be correct. But that doesn’t mean there aren’t opportunities to > > 1. Create jobs and investment incentives right now by changing corporate tax policy > 2. Actually raise more revenue, via the corporate ‘Laffer effect’ by lowering and simplifying corporate tax rates. Tax mercantilism is no more productive than other forms of mercantilism. the benefits are temproary until the other jurisdictions start a race to the bottom. The Laffer curve kind of requires a work leisure tradeoff, I don’t know that corporations make that sort of tradeoff. And even if they did, the laffer effect doesn’t work to increase revenue at these tax rates. You have to get to those 90% rates (or at least above 50% rate and probably more like 70% rates) before you were talking about to see any real laffer curve effects. If you believe that cutting taxes (from current levels) will increase revenue then you are 100 WRONG. Every honest tax expert (conservative or otherwise) will tell you the same thing, raising the tax 1% will increase revenues and lowering it 1% will decrease revenues. Taxes have to be at confiscatory levels before the laffer effect starts to kick in. [Previous page](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887.md?page=1) [Next page](https://boards.straightdope.com/t/what-would-happen-if-we-eliminated-corp-tax/543887.md?page=3)