Major surgery needed: A call for structural reform of the US corporate income tax
Cosponsored by the Urban-Brookings Tax Policy Center
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Event Summary

Many experts acknowledge that the current US corporate income tax system introduces numerous distortions at both the national and international levels. On Friday, Alan Viard of AEI and Eric Toder of the Urban-Brookings Tax Policy Center presented a new paper, funded by the Peterson Foundation, that panelist Martin Sullivan heralded as work that should be at the front of the tax reform debate.

Toder and Viard offered two options for reforming the current corporate tax system. The first option calls for international cooperation on the allocation of multinational corporations’ income across countries. The second option would eliminate the corporate tax altogether and replace it with a tax on dividends and accrued capital gains at the shareholder level.

Pamela Olson of PricewaterhouseCoopers and Martin Sullivan of Tax Analysts discussed the challenges that would need to be addressed, including the difficulty of achieving international agreement under the first option and the political backlash that may ensue if the corporate tax were abolished under the second option. The panelists also noted the potential economic benefits of the two options in reforming a deeply problematic corporate tax system.
--Regan Kuchan

Event Description

The US corporate income tax is widely considered to be deeply flawed, particularly in its treatment of foreign-source income. At this event, Eric Toder of the Urban-Brookings Tax Policy Center and AEI’s Alan D. Viard will present a report, funded by the Peter G. Peterson Foundation, explaining that the current corporate income tax system bases tax liability on two concepts that defy easy definition — the source of corporate income and the residence of corporations.

Toder and Viard call for structural reform that would either find an internationally agreed-upon way to define those concepts or restructure the tax system so that it no longer relies on them. They will outline two options: seeking international agreement on how to allocate multinational corporations’ income among countries or replacing the corporate income tax with taxation of dividends and accrued capital gains of American shareholders at ordinary income tax rates. Martin A. Sullivan of Tax Analysts and Pamela Olson of PricewaterhouseCoopers will discuss the strengths and weaknesses of both ideas.

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Agenda

8:45 AM
Registration and Continental Breakfast

9:00 AM
Introduction:
David Wessel, Brookings Institution

Presenters:
Eric Toder, Urban-Brookings Tax Policy Center
Alan D. Viard, AEI

Commentators:
Pamela Olson, PricewaterhouseCoopers
Martin A. Sullivan, Tax Analysts

10:30 AM
Adjournment

Event Contact Information

For more information, please contact Regan Kuchan at [email protected], 202.862.5903.

Media Contact Information

For media inquiries, please contact [email protected], 202.862.5829.

Speaker Biographies

Pamela Olson is the deputy tax leader and Washington national tax services practice (WNTS) leader of PricewaterhouseCoopers (PwC). In her role as WNTS leader, Olson leads a team that includes many former senior government officials and policy advisers. Before joining PwC, she retired as the leader of a major law firm's Washington, DC, practice and served as assistant secretary for tax policy at the US Department of the Treasury. As assistant secretary for tax policy, Olson had supervisory responsibility for providing the secretary of the Treasury with policy analysis and recommendations for all domestic and international issues of federal taxation — including legislative proposals, regulatory guidance, and tax treaties — and for providing the official estimates of all government receipts for the president’s budget and Treasury cash-management decisions. Olson also held positions with the chief counsel’s office of the Internal Revenue Service as special assistant to the chief counsel, as attorney adviser in the legislation and regulations division, and as trial attorney in the San Diego District Counsel Office. In 2000 and 2001, she was the first woman to serve as chair of the American Bar Association Section of Taxation. She has served as tax adviser and economic adviser to two presidential campaigns and as tax adviser to the National Commission on Economic Growth and Tax Reform. She has been included repeatedly in Chambers USA guide’s rankings of America’s leading lawyers for business and of the best lawyers in America for tax law. Olson served as a regent of the American College of Tax Counsel and on the board of several tax-exempt organizations. She received distinguished service awards from the Federal Bar Association and from Tax Executives Institute and received the Department of the Treasury’s highest award.

Martin A. Sullivan is chief economist at Tax Analysts, a nonprofit provider of tax news and analysis for the global community. He contributes regularly to various Tax Analysts print and online publications including the flagship magazine Tax Notes and its sister publications, State Tax Notes and Tax Notes International. He is also the author of “Corporate Tax Reform: Taxing Profits in the 21st Century” (Apress, 2011). He testifies regularly before Congress, appears on national television and radio, and is often quoted in leading newspapers and magazines. Previously, he served as an economist at the US Department of the Treasury, the congressional Joint Committee on Taxation, and a major accounting firm.

Eric Toder is an Institute Fellow at the Urban Institute and codirector of the Urban-Brookings Tax Policy Center. Toder’s recent work includes papers on corporate tax reform, net benefits of payroll tax expenditures, who benefits from tax exemption of municipal bond interest, ways of limiting tax expenditures, using a carbon tax to pay for corporate rate cuts, cutting tax preferences to pay for lower tax rates, tax expenditures and the size of government, tax policy and international competitiveness, value-added taxes, the home mortgage interest deduction, trends in tax expenditures, the distributional effects of tax expenditures, charitable tax incentives, taxation of saving, the tax gap, and effects of changes in pension coverage and stock prices on retirement income Toder previously held a number of positions in tax policy offices in the US federal government and overseas, including service as deputy assistant secretary for tax analysis at the US Department of the Treasury, director of research at the Internal Revenue Service, deputy assistant director for tax analysis at the Congressional Budget Office, and consultant to the New Zealand Treasury.

Alan D. Viard is a resident scholar at AEI, where he studies federal tax and budget policy. Before joining AEI, Viard was a senior economist at the Federal Reserve Bank of Dallas and an assistant professor of economics at Ohio State University. He has also been a visiting scholar at the US Department of the Treasury's Office of Tax Analysis, a senior economist at the White House's Council of Economic Advisers, and a staff economist at the Joint Committee on Taxation of the US Congress. While at AEI, Viard has also taught public finance at Georgetown University’s Public Policy Institute. Earlier in his career, Viard spent time in Japan as a visiting scholar at Osaka University’s Institute of Social and Economic Research. He is a frequent contributor to AEI’s On the Margin column in Tax Notes and was nominated for Tax Notes’ 2009 Tax Person of the Year. He has also testified before Congress, and his work has been featured in a wide range of publications. Viard is the coauthor of “Progressive Consumption Taxation: The X Tax Revisited” (AEI Press, 2012) and “The Real Tax Burden: Beyond Dollars and Cents” (AEI Press, 2011) and the editor of “Tax Policy Lessons from the 2000s” (AEI Press, 2009).

David Wessel is director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, which provides independent, nonpartisan analysis of fiscal and monetary policy issues to further public understanding and to improve the quality and effectiveness of those policies. He joined Brookings in December 2013 after 30 years on the staff of The Wall Street Journal where, most recently, he was economics editor and wrote the weekly Capital column. He is a contributing correspondent to The Wall Street Journal and appears frequently on NPR’s “Morning Edition.” Wessel is the author of two New York Times bestsellers: “In FED We Trust: Ben Bernanke’s War on the Great Panic” (Crown Business, 2009) and “Red Ink: Inside the High Stakes Politics of the Federal Budget” (Crown Business, 2012). He has shared two Pulitzer Prizes, one in 1984 for a Boston Globe series on the persistence of racism in Boston and the other in 2003 for Wall Street Journal stories on corporate scandals.

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