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Tags: Kotlikoff | income | tax | corporate

Kotlikoff: Workers Should Lobby to Eliminate Corporate Income Tax

By    |   Tuesday, 07 January 2014 06:50 AM EST

American workers should lobby to eliminate corporate income tax, because it's in their best interest, argues Laurence Kotlikoff, author and professor of economics at Boston University.

To have jobs, you need companies that are willing to operate where you live, Kotlikoff explains in a New York Times op-ed. Eliminating corporate tax isn't a giveaway to the rich; it's a worthy concession to encourage companies to do business in America and employ American workers, he explains.

The rich can take their companies and run. They can, and often do, move their operations and jobs abroad, he notes. For example, Apple has substantial operations and profits overseas, but reportedly paid only 8.2 percent of its worldwide profits in U.S. corporate income taxes.

Editor’s Note:
Obama Donor Banned This Message (Shocking)

And "Amazon and Google are in a horse race to see how many humans they can put out of work with self-guided delivery drones and driverless cars," he alleges.

The problem is the U.S. corporate income tax, which is among the highest effective marginal tax rate in the developed world, Kotlikoff maintains. Calculations place the rate between 23 percent and 35 percent, and it's "economically self-defeating — hurting workers, not capitalists, and collecting precious little revenue to boot," he writes.

Kotlikoff says research he conducted with colleagues through the Tax Analysis Center makes a very strong, worker-based case for corporate tax reform.

Eliminating corporate tax and replacing lost revenues with "somewhat higher personal income tax rates" results in "rapid and dramatic increases in American investment output and real wages, making the tax cut self-financing to a significant extent."

Or smaller gains are also seen if the corporate tax rate is cut to 9 percent and all corporate tax loopholes are eliminated, he notes.

Both policies generate welfare gains for all generations, particularly young and future workers, and all Americans can benefit, Kotlikoff argues.

Another option is to eliminate corporate tax and tax shareholders for company profits instead. Therefore, companies with no tax would have no reason to avoid operating in the United States, he explains.

To steer workers away from the current "American nightmare" toward the American dream requires corporate tax reform, says Kotlikoff.

But some researchers disagree. A study from the Center for Effective Government "found no relationship between cutting taxes on corporate profits and job growth."

The average U.S. corporate tax rate is 12.6 percent of profits, the study says. Of 60 Fortune 500 companies, 22 with tax rates of 30 percent or higher created almost 200,000 jobs between 2008 and 2012. But, of the 30 companies that paid little or no taxes, half shed jobs.

For instance, Verizon reported $32 billion in U.S. profits between 2008 and 2010 and, received $951million in tax refunds, but cut over 56,000 jobs between 2008 and 2012, the researchers note.

Evidence shows a lower corporate tax rate is not an effective path to creating jobs in the United States, the study concludes.

Editor’s Note: Obama Donor Banned This Message (Shocking)

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Economy
American workers should lobby to eliminate corporate income tax, because it's in their best interest, argues Laurence Kotlikoff, author and professor of economics at Boston University.
Kotlikoff,income,tax,corporate
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2014-50-07
Tuesday, 07 January 2014 06:50 AM
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