The United States Can Fix Corporate Taxes

Corporate taxes in the country have been an issue of discussion for quite a long time. This issue seems to be quite sensitive based on the players involved. United Sates has the highest official corporate tax rate compared to other advanced economies. It is currently at 35%; compare this to countries such as Germany, Canada, U.K, Japan, China, and Singapore, which are 15%, 15%, 23%, 25.5%, 25% and 17% respectively (Bischoff). This aspect forces companies to devote their effort and time in avoiding paying the official rates. The tax code also has many loopholes, which allows companies to end up paying relatively low than it would be expected hence depriving the country valuable revenue. Most of this is done through corporate inversions.

However, there are things that can be done to help solve the problem of revenues that are usually lost through inversions. Among the solutions is abolishing corporate income tax altogether. This would be substituted by an increase in tax burden to the shareholders. This would involve taxing capital gains and dividends at a similar rate as the ordinary income. With this proposal, these gains ought to be taxed every year, and not only when the stocks are sold (Barro). A disadvantage here is that the approach would result in loss of revenue. However, the problem could be fixed by raising income tax rate on the individuals that would benefit from the abolishment. This will definitely be the rich people owning most of these financial assets and non-p

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