Truth2Know
Gold Member
- Dec 18, 2014
- 354
- 199
- 190
Here’s a question for all you economists. Does it make sense to drop the US Federal tax rate – perhaps all the way to zero?
Here is why I’m asking the question. The sources of Federal government revenue are:
Policy Basics Where Do Federal Tax Revenues Come From Center on Budget and Policy Priorities
Only 11% of Federal revenue comes from the corporate income tax. This is despite the fact that the effective U.S. corporate tax rate of about 27% is among the highest in the world. Does the U.S. have the highest corporate tax rate in the free world PunditFact The high US corporate tax rate negatively affects our competitive position.
IF the corporate tax rate went to zero and IF U.S. manufacturers used this windfall to expand their businesses, or new businesses were started, employment would increase. Would the additional Income Tax and Payroll Tax from higher employment compensate for, or perhaps surpass, the loss of corporate tax revenue?
If a zero federal corporate tax rate isn’t the right number, it seems like there must be some rate (probably lower than the current 27% effective tax rate) that maximizes the benefit to our economy. Decreasing Federal welfare benefits due to higher employment would also be a factor in selecting the optimum corporate tax rate.
Something needs to be done since we can’t keep spending more than we are bringing in.
Here is why I’m asking the question. The sources of Federal government revenue are:
Policy Basics Where Do Federal Tax Revenues Come From Center on Budget and Policy Priorities
Only 11% of Federal revenue comes from the corporate income tax. This is despite the fact that the effective U.S. corporate tax rate of about 27% is among the highest in the world. Does the U.S. have the highest corporate tax rate in the free world PunditFact The high US corporate tax rate negatively affects our competitive position.
IF the corporate tax rate went to zero and IF U.S. manufacturers used this windfall to expand their businesses, or new businesses were started, employment would increase. Would the additional Income Tax and Payroll Tax from higher employment compensate for, or perhaps surpass, the loss of corporate tax revenue?
If a zero federal corporate tax rate isn’t the right number, it seems like there must be some rate (probably lower than the current 27% effective tax rate) that maximizes the benefit to our economy. Decreasing Federal welfare benefits due to higher employment would also be a factor in selecting the optimum corporate tax rate.
Something needs to be done since we can’t keep spending more than we are bringing in.