Jon Gruber on one reason to keep taxing corporate income

May 23, 2013

MIT economist Jon Gruber writes in:

Nice piece on the corporate tax. But you don't mention one important issue and to my mind the main argument for the corporate tax: if you don't tax corporate income, then you don't tax the earnings until it is released to shareholders. That is akin to the problem with taxing foreign income - you give an incentive for companies to hoard the money rather than releasing it. I think that is an important issue. I like the idea of getting rid of the corporate tax, but to my mind that is the biggest barrier.

Kevin Roose mounts a defense of the corporate tax here. I actually agree with most everything Roose says. I can imagine a better tax code that doesn't include a corporate tax. But I don't think that tax code is even vaguely within the realm of possibility.

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