As I wrote last week, there is broad bipartisan agreement that Congress must reduce the statutory tax rate on C corporations. However, politicians won’t find easy answers when it comes to paying for meaningful rate reduction. Ending subsidies to oil and gas companies or repealing the accelerated depreciation for corporate jets won’t make a real dent in the budget. Meanwhile, the largest tax expenditures in the corporate tax code effectively encourage capital investment, or Research & Development, just to name a few. Many of these breaks serve a reasonable economic purpose, and sizeable constituencies will fight their repeal.
Category Archives: Blog
Paying for Corporate Tax Reform
According to yesterday’s FT, corporate tax reform in the United States has been put on the back burner. But that hasn’t stopped experts from proposing new options for reforming the broken code. Recently, my colleagues at Brookings released “A Dozen Economic Facts about Tax Reform,” (pdf) which included several illustrative options for corporate tax reform. And yesterday, Laura Tyson, the head of the Council of Economic Advisers for former President Clinton, outlined her proposal for a revenue-neutral reduction in the corporate tax rate.
Lessons from the Social Security and Medicare Trustees’ Reports
The Social Security Trustees released their latest report yesterday, which showed that the finances of the system are deteriorating. In particular, The Trustees moved up the date when Social Security will become insolvent by three years, from 2036 to 2033. In 2033, absent any reform, the Social Security benefits of all recipients will be reduced across the board by 25%.
Jumpstarting Hedge Funds
President Obama is about to sign into law the JOBS Act (pdf) – which stands for Jumpstart Our Business Startups. This Act has broad bipartisan support because it purports to create jobs by reducing the regulatory burdens on capital raising by small business. Whether the JOBS Act achieves this objective is another matter—which I have written about with Harvard Law Professor John Coates.
The danger of rolling back investor protections
Right about now, the Senate is scheduled to vote on H.R. 3606, the “JumpStart Our Business Start-ups Act” (or “JOBS Act”), which passed the House 390 to 23. The bill would roll back investor protections for a wide swath of mid-sized companies. Last week, Harvard Law School’s John Coates and I wrote an Op-Ed for the Washington Post arguing that the reforms would go too far.
Bloomberg: “Pimco Deploys Derivatives in Race for Target-Date Fund Investors”
Bloomberg recently interviewed me for an article about the challenges facing target date funds, which are designed to gradually reduce an investor’s risk as he or she approaches retirement. Here’s what I had to say in the article:
Smoothing Corporate Pension Plan Discount Rates
There’s a controversial cost-offset provision in the highway bill currently being debated in the Senate; it would effectively allow corporations to make smaller contributions to their pension plans. And since a smaller contribution means a smaller tax write-off, tax revenue would increase by $7 billion over ten years. Although the bill itself is certainly not headed for an easy passage, this provision has raised some interesting—and complex—issues related to pension accounting.
Some Quick Thoughts on the Math of Obama’s Corporate Tax Reform Plan
Yesterday, President Obama put forth his framework (pdf) for corporate tax reform. I’ve written at length about the international component of the reform—see my FT piece or my Huffington Post piece—so let me concentrate for now on the domestic side.