Replacing Corporate Tax Revenues with a Mark to Market Tax on Shareholder Income

With state corporate income taxes included, the combined U.S. corporate tax rate averages about 39.1 percent; the highest in the Organization of Economic Cooperation and Development (OECD). Because the corporate tax penalizes investment in the United States, it ultimately lowers the U.S. capital stock and reduces American workers’ real wages.

Lowering the corporate tax rate to 15 percent would encourage a flow of capital into the United States and reduce incentives to shift reported profits overseas and to engage in inversion transactions, while continuing to impose tax on foreigners who earn economic rents from investing in the United States.

The proposal would lower taxes on investing, and on booking profits. Moreover, the corporate income tax rate reduction would increase real investment in the United States and the amount of profits booked in the United States.

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