Corporate Tax Reform: Time to Think Outside the Box

Corporate Tax Reform: Time to Think Outside the Box

Thanks to President Obama, corporate tax reform has gone prime time. Major news outlets are reporting on closed-door discussions involving Treasury officials, congressional staff, and industry representatives and on any utterance from members of Congress on the topic. But progress is slow, and most veterans of prior reform efforts are pessimistic.

The main problem is that the president has so limited the scope of the debate that most meaningful options are off the table. He has called for revenue-neutral corporate tax reform -- widely interpreted to mean that reform would not change overall corporate revenues. More specifically, revenues lost from a cut in the statutory corporate tax must be offset by cutting corporate tax breaks.

At first glance, there is a lot to be said for Obama's approach. Hard-wired into the brains of all economists -- no matter their politics -- is that classic tax reform with rate cuts and base broadening is good tonic for an economy that needs to improve its competitiveness. We should be mindful of the political advantages for the president as well. By working with business groups on their long-sought goal of corporate rate reduction, his administration is building relationships rather than burning bridges.

View TaxAnalysts' Martin Sullivan's opinion in its entirety on


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