Claire Hill

3 years ago
I agree with James that foreigner investors should be subject to some level of tax, at a globally competitive level, such as 15%, since they are benefitting from our government's stability, infrastructure, and human capital. However, I do like the idea of eliminating the majority of the burden from foreign investors because they gain considerably less from the U.S. public goods. Further, I imagine considerable political backlash for a policy that promotes increased foreign investment. In a time when we are increasingly worried about foreign economic dependency for "national security" reasons, increasing foreign ownership of large US economic actors may be highly controversial.

Overall, I do think the elimination of a tax on the corporate entity, and instead taxing American shareholders of publicly-traded companies on dividends and capital gains at full ordinary income tax rates is useful in promoting investment, eliminating double taxation, eliminating inversions and the bias towards debt financing ect.. However, how will the elimination of the corporate tax affect corporate behavior that is currently incentivized through tax expenditures on corporations via the deductions on the 1120. In particular, how would the elimination of taxes directly on the entity affect the "good behavior" incentivized by deductions from taxable income, such as the provision of employee benefits, charitable contributions, and domestic production activities. Further, who would be hurt by the elimination of these loopholes and who, or what industries might benefit? Would the expected overall increases in wages and growth be enough to off-set losses for individuals who may have previously benefitted from these loopholes?
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3 years ago
I agree with James that foreigner investors should be subject to some level of tax, at a globally competitive level, such as 15%, since they are benefitting from our government's stability, infrastructure, and human capital. However, I do like the idea of eliminating the majority of the burden from foreign investors because they gain considerably less from the U.S. public goods. Further, I imagine considerable political backlash for a policy that promotes increased foreign investment. In a time when we are increasingly worried about foreign economic dependency for "national security" reasons, increasing foreign ownership of large US economic actors may be highly controversial.

Overall, I do think the elimination of a tax on the corporate entity, and instead taxing American shareholders of publicly-traded companies on dividends and capital gains at full ordinary income tax rates is useful in promoting investment, eliminating double taxation, eliminating inversions and the bias towards debt financing ect.. However, how will the elimination of the corporate tax affect corporate behavior that is currently incentivized through tax expenditures on corporations via the deductions on the 1120. In particular, how would the elimination of taxes directly on the entity affect the "good behavior" incentivized by deductions from taxable income, such as the provision of employee benefits, charitable contributions, and domestic production activities. Further, who would be hurt by the elimination of these loopholes and who, or what industries might benefit? Would the expected overall increases in wages and growth be enough to off-set losses for individuals who may have previously benefitted from these loopholes?
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