In my last post, I linked to Amy Elliott's Tax Notes article from this past Monday, entitled "Academics Dismiss Corporate Tax Reform Consensus as Superficial." But for some readers it may behind a paywall. So here are the parts most pertinent to the topic highlighted in the article title:
"Bipartisan talk of corporate tax reform is easy to come by in the halls of Congress, but it's merely talk, agreed a group of academics gathered in Newton, Massachusetts, on October 10.
"'The big consensus about corporate tax reform is really a superficial consensus,' said Daniel N. Shaviro of the New York University School of Law, speaking at a conference on entity taxation hosted by Boston College Law School and cosponsored by Tax Analysts. 'There's no obviously good way of doing it and that means that any proposal you put forth, . . . even if it would be an improvement, is going to have serious objections.'
"Harvard Law School professor Stephen E. Shay indicated he has lost hope for major tax reform in the near term. 'I don't view fundamental tax reform or any major piece of reform as remotely plausible for the next couple of years -- at least until some event-changing election,' he said. 'Any tax reform has to win a majority. The practical problem that we face today is we have -- unlike in  -- a vastly more disparate set of objectives with respect to tax.'
"Shay added that the consensus that really needs to be built is between House and Senate Republicans. The party that controls the Senate 'is actually much less important for this issue than some people put credence on,' he said, adding that Congress is still struggling with the core structural problem presented by corporate tax reform: how to ameliorate its negative effect on owners of passthroughs.
"Brian Galle of Boston College Law School said he's not convinced that the passthrough model is the right way to tax corporate income. He said he thinks the U.S. tax system should increase the number of available rate structures and the nuance within those structures, providing for different rates for different kinds of business income.
"'The elasticity of salary can be very different from the elasticity of business income, [and] within business income, you can have very different elasticities between old-and-cold businesses,' entrepreneurial businesses, domestic versus foreign-owned businesses, and real-property-heavy businesses, Galle said.
A couple of quick comments in response to Galle's interesting points, which I didn't get a chance to say anything about at the session. His first point about the elasticities of different types of income I agree with, except that it doesn't necessarily weigh against thinking that the passthrough model would be best if (counterfactually) it were feasible. Rather, to me it suggests that, even when you are taxing individuals directly, the tax rate you want to apply may depend both on who it is and on what type of income it is.
His second point is a great one, and I think especially applicable to international taxation, in which the multinationals that have greatly reduced their tax burdens through aggressive planning might now be happy to lock in the end result by a different mechanism. There is a legitimate issue of whether and how much their tax burdens, depending in part on elasticity, U.S. market power (or ability to coordinate effectively with other countries if this increases the collective market power that the cooperating governments can deploy). But the fact that they have succeeded in lowering it so much does not establish that the right level is so low. This is a problem for proponents of "burden-neutral" international tax reform, as much as for Congress if it wants to put on a 1986-style tax reform hat for the international area in particular.