My Bloomberg View column explains why bipartisan agreement that the corporate tax rate ought to come down is not going to lead to action.
The bigger problem concerns the majority of American businesses (the small businesses organized as S corporations, partnerships and sole proprietorships) that pay the individual income tax rather than the corporate tax. They wouldn’t benefit from the reduction of the corporate rate.
Some of these businesses pay the top individual-tax rate, which is scheduled to increase to 39.6 percent with the president’s blessing. Brian Reardon, the executive director of the S Corporation Association, points out that the president also favors raising taxes on dividends. Put these policies together, he says, “and it’s likely the overall impact of the Administration’s proposal will be to raise the cost of new business investment compared to the cost today.”
I go on to point out that while Senator Rob Portman (R., Ohio) wants to move ahead with corporate-tax reform, most Republicans are siding with Rep. Dave Camp (R., Mich.), who is holding out for a comprehensive reform that addresses small-business concerns too.