Is it crazy to abolish the corporate income tax? Yes. One of the reasons why we have high corporate income taxes in this country is so that we can have somewhat lower individual income taxes and not have a deficit that’s even bigger than we already have.
But that doesn’t mean the U.S. corporate income tax shouldn’t be lower.
Only two other countries have higher corporate tax rates than the U.S.’s combined federal and state tax of 38.9%: the United Arab Emirates and Puerto Rico, two places that don’t exactly break records for job creation. In many ways the U.S.’s corporate taxes have backfired, as businesses try to avoid them, often finding a smaller foreign company to buy their operations so they can reduce their tax bill, and keeping trillions of cash in overseas accounts.
President Donald J. Trump made lowering the corporate tax rate one of his signature economic issues.
Now that Republicans control the House, the Senate, and the White House, look for corporate taxes to get reduced significantly as part of a broader tax-reform effort. The point man on this will be Wisconsin Congressman and House Speaker Paul Ryan, who knows every inch of the U.S. tax code.
But to return to your question: No, you don’t want to abolish the corporate tax rate. You want to lower it in a way that doesn’t bust the budget and cause deficits to grow, interest rates to spike, and then the economy to stall. But if lawmakers find the right rate, look for businesses to stay here in the U.S. and repatriate trillions of dollars from overseas accounts.
Charles Gasparino is a Senior Correspondent at Fox Business Network. Follow him on Twitter.