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April 9, 2012

The Corporate Tax Debate, And What's Being Left Out

Recently, the United States inherited #1 rank in highest corporate tax rates in the world.  This has increased the debate about whether or not there should be some type of corporate tax reform.  In most debates, we hear about the marginal rate, but the other side (which says the real rates are lower), notes that after deductions and in some cases subsidies, the tax rates are actually lower.

What needs to be added to the discussion is the costs associated with the deductions and subsidies.  There is no doubt that many of these organizations need accountants and lawyers in order to get these tax deductions and subsidies.  These costs can come in the form of having accountants and lawyers directly on the payroll or paying outside help.

Additionally, there's costs associated with the application process for subsidies and costs associated with bringing in outside consultants to find new subsidy opportunities.  Reforming the tax structure for corporations has to not only take these costs into consideration, but it needs to make these ancillary processes more efficient.

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