The US corporate income tax reduces incentives for multinational corporations to invest, book profits, and maintain residence in the United States. But reforms that address some of these adverse incentives generally worsen others.
In a new report, Alan D. Viard and Eric Toder suggest basing tax liabilities for corporate profits on the residence of individual shareholders rather than on the residence or income source. Elaborating on their April 2014 report, Viard and Toder propose reducing the rate to 15 percent and taxing American shareholders’ dividends and accrued capital gains at ordinary income tax rates. They suggest this would counteract flawed incentives while ensuring that corporate shareholders bear their share of the tax burden.
Join the American Enterprise Institute and the Urban-Brookings Tax Policy Center for an event unveiling the report.