Magazine April 30, 2012, Issue

The Stubbornest Tax

Bill Clinton discusses deficit reduction at the Cleveland City Club Forum, October 24, 1994. (Gary Cameron/Reuters)
Why the U.S. hasn’t cut corporate rates, and why it really should

The first order of business for a Republican president next year should be corporate-tax reform. But even if Republicans win big in the fall, undoing America’s largest policy error will be an almost impossible political lift, unless enough people in both parties come to grips with the counterintuitive economics of corporate-tax reform.

The U.S. is radically out of step with contemporary corporate-tax practice. On April 1 of this year, Japan reduced its combined corporate-tax rate — that is, its federal rate plus the average corporate tax levied by state and local governments — from 39.5 to 38 percent, leaving the U.S.

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Kevin A. Hassett served in the Trump administration as a senior adviser to the president and is a former chairman of the Council of Economic Advisers. He is the senior adviser to National Review's Capital Matters, a new initiative focused on financial and economic coverage, and is the Vice President of the Lindsey Group.

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