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Between the last-minute ceasefire to raise the debt ceiling, the Dow’s 512-point tumble, and talk of a double-dip recession (despite the uptick in July employment numbers), it has been a roller coaster kind of kick-off to the dog days of August. What everyone wants to know is: how can the U.S. slash its deficit and stimulate growth at the same time? Corporate tax reform factors in as politicians, economists, and commentators debate the optimum formula for reducing spending, collecting revenues, and sparking job growth. As the national economic debate twists and turns, whither corporate taxes? To help sort it out, CorpCounsel.com has collected a few good reads on corporate taxation: In a Wall Street Journal editorial, “Tax Reform’s Moment?,” Stephen Moore revisits the pivotal 1986 moment when Senator Bob Packwood championed a “wholesale restructuring of the tax system,” capturing the support of Democrats and Republicans alike to bring down the corporate tax rate. If it’s growth we want, Moore writes, there’s evidence that the 1986 reforms generated $1 trillion in economic gains. A repeat of 1986 would be good for both blue and red pols: For Democrats (especially President Obama), an overhaul could spark job growth before the November 2012 elections; for Republicans, dropping special-interest loopholes and credits in return for a lower rate would generate positive economic value, grow the economy, and lower the deficit. Both Megan McArdle at the The Atlantic and Quin Hillyer at The American Spectator are on board with getting rid of corporate taxes altogether. Among McCardle’s reasons, in a piece published last November: The corporate income tax encourages firms to waste resources on tax avoidance . . .Big corporations can and do spend an enormous amount of money and human effort transforming their income into more tax-preferred forms—deferring it, moving it, swapping it with entities that have different tax rules, and so forth. If we get rid of the corporate income tax, we could eliminate the special treatment for dividends and capital gains . . .the fact remains that a 35% corporate income tax combined with, say, a 43% marginal income tax rate (once we add in the special Medicare surcharges), would be a hell of a disincentive for the very wealthy to invest. Hillyer also advocates for an elimination of corporate income taxes—and supports presidential candidate Rick Santorum’s plan for cutting corporate income taxes in half: Much of the money would be made up, even without economic growth, via increased tax receipts on dividends and capital gains. But, of course, the economic growth would be substantial. Companies would suddenly have profits a third bigger than before, which would cause a combination of stock market gains, price cuts, and re-employment. What gives rise to skepticism about these arguments, however, is that the rise of corporate profits during the recession has not translated to more jobs. So would lowering the tax rate actually equate to employment gains? Rolling Stone‘s Matt Taibbi says, Not so fast. In a blog post about the possibility of a tax-holiday bill, Taibbi calls attention to a Bloomberg piece on Cisco, which has lobbied hard for the holiday: And yet . . .Cisco, would not commit to creating so much as a single job if the tax holiday is passed. As it is, the company has already committed to a wave of layoffs. For a breakdown of the various tax issues confronting the new deficit reduction Congressional super-committee, see this Reuters piece on comprehensive tax reform: Another business lobbying push—for lowering the 35-percent corporate income tax rate, possibly in exchange for acquiescing to loophole closures—will come up, but also probably be too big a bite for the panel, analysts said. “There is an interest in tax reform, but the idea that it will happen between now and November is to live in a fantasy land,” said Dean Zerbe, a former senior Senate tax staffer and now managing director at tax consultancy alliantgroup. When Congress returns from its August recess and the next round of economic politicking begins in earnest, expect to see these ideas (and many more) at the forefront of the ongoing debate.

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