U.S. Corporate Income Tax Reform and its Spillovers

By Kimberly Clausing, Edward Kleinbard, Thornton Matheson

July 5, 2016

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Kimberly Clausing, Edward Kleinbard, and Thornton Matheson. U.S. Corporate Income Tax Reform and its Spillovers, (USA: International Monetary Fund, 2016) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the main distortions of the U.S. corporate income tax (CIT), focusing on its international aspects, and proposes a set of reforms to alleviate them. A bold reform to replace the CIT with a corporate-level rent tax could induce efficiency-enhancing reform of the international tax system. Since fundamental reform is politically difficult, this paper also proposes an incremental reform that would reduce tax expenditures, reduce the CIT rate to 25-28 percent, and impose a minimum rent tax on foreign earnings. Finally, this paper analyzes empirically the likely impact of the incremental on corporate revenues outside the U.S.: Though a U.S. rate cut would likely lower revenues elsewhere, implementation of a strong minimum tax could more than offset that effect for most countries with effective tax rates above 15 percent.

Subject: Corporate income tax, Income, Income and capital gains taxes, Income tax systems, Labor, National accounts, Taxes, Wages

Keywords: Accelerated depreciation, Beneficial owner, Corporate income tax, Cost of capital, Depreciation and amortization, Earnings, Earnings before interest, Firm, Firm level, Global, Gross income, Income, Income and capital gains taxes, Income tax systems, International taxation, METRs range, Passive income, Return, Single tax, Tax liability, Tax reform, Tax return, Tax treatment, Taxable income, Taxes, Wages, WP

Publication Details

Pages:

47
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/127
Stock No:

WPIEA2016127
ISBN:

9781498348942
ISSN:

1018-5941

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