No one is satisfied with the US corporate tax system. From one perspective, the main problem is that, while corporate profits are extraordinarily high relative to gross domestic product, tax collections are very low. Many very successful companies pay little or nothing in taxes at a time when the budget deficit is a serious concern; and when hundreds of thousands of defence workers are being furloughed, or sent on unpaid leave; and when lotteries are being held to determine which families cease to receive help from the Head Start pre-school education programme.
From another perspective, the main problem is that the US has a higher corporate tax rate than any other leading economy and, unlike other countries, imposes severe taxes on income earned outside its borders. This is thought to burden unfairly companies engaged in global competition, to discourage the repatriation of profits earned abroad and – because of the patterns of investment that it causes – to benefit foreign workers at the expense of their US counterparts.
These two perspectives on corporate taxes seem to point in opposite directions. The first points towards the desirability of raising revenues by closing loopholes; the latter perspective seems to call for a reduction in corporate tax burdens. It seems little wonder that corporate tax reform debates are so divisive.