Have I mentioned before that I hate corporate taxes?
I've been reminded of this by a decent NY Times article on some of the problems with tax rates on repatrioted earnings, worth taking the time to read.
Now, a couple of thoughts on this. First, absent other changes in the tax code, I'm a little uncertain about Dealbook's recommendation of simply slashing the tax. The US tax code already provides a number of useful tax exemptions to multinational corporations, without addressing these I'm a sceptic that the advantage of some increased revenue collection and increased investment at home is worth the relative growth of these corporations relative to more domestically focused competitors. While many ideas are still good in isolation, I'm not certain this is one of them without doing some more research.
More broadly however, the US is way overdue for corporate tax reform. Corporate taxes in general are rather pernicious, they are uncertain in their incidence and allow for the deception that we aren't really taxing people. But all taxes are ultimately taxes on individuals, with corporate taxes we just don't know which individuals are being taxed. The simple solution would be to just eliminate the tax entirely and increase rates on individuals.
However, even at a crude first approximation, that doesn't work either. For one thing, the income flowing to individuals from corporations isn't always going to individuals within the US power to tax. If one likes bad sci-fi, it is possible to imagine this scenario leading to a situation where everything in the US is owned by people living on floating libertarian islands, denying the US all revenue it formerly received through corporate taxes.
More generally, the US corporate tax code is simply out of line in many aspects with international norms. Simply bringing it within these norms would be a major step forward. Another major problem, aside from international competitiveness and tax incidence issues, with the current situation is it simply reinforces the focus on capital gains rather than dividend income. I've long thought this is a major driver behind many problems the US is facing today (and I've done a couple of posts on related subjects) so should be faced in any prospective reform.
Bottom line, Dealbook gets at an issue I think we need to think about. I don't think however that dealing with this situation in isolation is worth doing. If we are going to have an overall revenue deal within the next 5 years though, I think looking at corporate and individual tax rates as linked is the way to go. Slashing corporate rates in exchange for higher rates on individuals, and in particular high income individuals and capital gains, is a deal that probably is necessary for long run US competitiveness.