As we noted in a previous blog post, President Obama has elevated the issue of corporate tax reform by proposing a revenue-neutral package of changes to the corporate income tax code. The issue of business taxes is likely to get a lot of debate this year in Congress and on the campaign trail.
With that in mind, the Center on Budget and Policy Priorities issued a paper today with a six principles for evaluating proposals for corporate tax reform. CBPP says that federal legislation to reform taxes on businesses should meet these criteria:
- Contribute to long-term deficit reduction;
- Reduce the tax code's bias toward overseas investments;
- Improve economic efficiency by reducing special preferences;
- Provide more neutral treatment of corporate and non-corporate businesses;
- Reduce the tax code's bias towards debt financing; and
- Take specific steps to discourage tax sheltering.
See the CBPP report for a more detailed explanation of their principles for reform. See also the New York Times editorial yesterday, which makes the case for reforming business taxes and calls the President’s preliminary plan “a welcome start for a much-needed debate on comprehensive tax reform.” However, that editorial also raises the concern that the plan doesn’t address deficit reduction and observes that vigilance will be need to keep the process of reforming corporate taxes from being “hijacked by powerful corporations and their high-paid lobbyists.”