Congressional Republicans have a big new idea on corporate taxation that could nudge U.S. economic policy in a positive direction, if GOP lawmakers get certain details right.
First, the proposal: Companies based in the United States would be taxed at a flat 20 percent, as opposed to brackets up to 35 percent (riddled with deductions) under current law. The tax would be levied only on net income earned within this country — revenue from exports would be effectively tax free. Also, companies would write off new investment immediately, but lose the deduction for interest expenses they currently enjoy.
When you put these changes together, they create fresh incentives to locate economic activity—and register ownership of intellectual property—within the United States, to export rather than import, and to finance businesses with equity rather than debt. Other things being equal, that could improve tax efficiency and domestic job creation.
Read the full text of the Washington Post article on corporate tax reform HERE.