The Trouble With Corporate Taxes

The Trouble With Corporate Taxes.Introduction

In his State of the Union address, President Obama called for an overhaul of the corporate tax code. The federal corporate tax rate is 35 percent, higher than in almost any other country. But because the tax code is replete with loopholes, the government actually raises less money from corporations than in previous decades.

As David Leonhardt writes, some companies have paid less than 10 percent tax, and companies in the same industry often paid very different rates, even when they were similar in size. The system encourages companies to devote enormous amounts of time and effort to finding loopholes. Those that successfully use tax breaks would probably resist change.

How hard would it be to reform the corporate tax? Where should we start?