If you think that the House GOP tax plan (available here) would cut the corporate tax rate, you’re right. What you may not know is that it would cut the corporate rate to ZERO. That’s because the 20% corporate cash-flow tax in the House GOP is not an income tax at all but a consumption tax, which is to say, pretty much the same thing as a 20% value-added tax (VAT) of the kind many European countries have. Now, some academics think that a corporate cash-flow tax is a good idea, including Berkeley’s Alan Auerbach. But we ought to be clear about what’s being proposed. This 2013 paper, by Noël Cunningham and Mitchell Engler, offers an admirably clear analysis of two earlier versions of the same idea.
Blog
Tom Brennan and Al Warren on Lock-In in a Low Interest Rate Environment
Important piece on how to think about time value of money and the lock-in effect when interest rates are near zero.
Willard Taylor on Classifying Business Entities
Such an interesting piece on the arbitrary tax rules for classification of business entities.
David Weisbach on the House GOP Plan
This is an excellent analysis of the House GOP tax plan, a/k/a one likely blueprint for coming tax legislation.
Taxation and Social Justice
On this site, I’ll post links to articles of interest to students and others interested in taxation and social justice. I also blog occasionally at Whatever Source Derived.
