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The Trouble With Taxing Corporations (Demo)

On May 28, 2013, Eduardo Porter writes in The New York Times:

The case of Starbucks is particularly troubling for every government concerned about how it is going to finance itself in the future.

As Edward Kleinbard of the University of Southern California noted: if Starbucks could generate so much “stateless” income — beyond the reach of tax authorities both where it makes and sells the Frappuccinos and where it is incorporated as a company — “any multinational firm can.”

That means that as the government seeks new sources of revenue to pay for an expanding safety net and an aging population, it should probably look outside the corporate sector.

“We have a tax problem; we are not collecting enough tax revenue — period,” said Jim Hines of the University of Michigan. “But we are never going to finance what we need with corporate taxes.”

Instead, governments seeking revenue might do best focusing their efforts on taxing people, who cannot flee as easily, or taxing what people consume.

Some of this may come at the expense of progressivity in the tax code.

 

http://www.nytimes.com/2013/05/29/business/the-trouble-with-taxing-corporations.html?pagewanted=all&_r=0

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