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June 13, 2021, 11:01 a.m. ET
Credit.Illustration by The New York Time; photograph by Christohe Jonniaux/EyeEm, via Getty Images
Mr. Appelbaum is a member of the editorial board.
The decline of corporate taxation in recent decades is generally blamed on pirate states like Luxembourg, Ireland and Bermuda, which offer an alluring combination of very low tax rates and an unembarrassed enthusiasm for allowing companies to play make-believe.
But the pirates have a silent partner: the United States.
Generations of American policymakers haven’t shown much interest in collecting money from corporations. Regarding corporate taxation as politically necessary but economically suspect, they have responded to tax evasion by making disapproving noises. They have allowed companies to pretend profits are earned in low-tax countries and then cited the loss of tax revenue as the justification for tax cuts. Little wonder the United States collects a smaller share of tax revenue from corporations
A report showing that the richest Americans, including Jeff Bezos, Elon Musk and Warren Buffett, pay almost no taxes has refocused attention on the tax code.
Opinion Columnist
The budget proposal released by the Biden administration last week calls for almost $5 trillion in new spending over the next decade that is, outlays in excess of its “baseline” estimate of the spending that would take place without new policies. Some of the extra money would be borrowed, but most of it $3.6 trillion is supposed to come from new revenues.
President Biden has, however, repeatedly promised not to increase taxes on households making less than $400,000 a year. And his budget does indeed propose raising all the additional money via higher receipts from corporations and high-income individuals.
It’s worth noting, by the way, that the two proposals that have attracted the most attention raising the corporate tax rate, which Donald Trump cut from 35 to 21 percent, up to 28 percent, and raising the top individual rate back to 39.6 percent account for only a fraction of the proposed revenue increase (just over a quarter). Most of the money