Mike Lee: Eliminate corporate taxes

Mike Lee of Utah, writing in the publication the Federalist, suggested lowering the U.S. statutory corporate tax rate to zero while hiking the tax on dividends to 39.6 percent, in order to shift the burden of corporate taxation from workers to investors.

Lee called the idea a “much simpler, and more powerful, tax reform framework that would put ‘America first'” and “put the forces of globalization, even global elites themselves, to work for American workers, instead of the other way around.”

The logic is that eliminating corporate taxes would make it much more attractive to invest in U.S. companies, and relieve some of the current pressures on businesses to move their headquarters out of the country or offshore jobs. Cutting the corporate tax would benefit workers, on whom some of the burden of corporate taxes fall.

Lee’s op-ed is one of the first substantive comments from a Republican senator on the House Republican tax plan, which would try to accomplish some of the same goals through a destination-based corporate tax. That proposal would tax goods and services sold within the U.S., but exempt sales out of the country. It would work by allowing companies to deduct revenues from exports from their taxable income, but not costs from imports.

President Trump this month commented that the plan might be too complicated, and Lee agreed with that criticism in his op-ed. “I’m not sure I love border adjustment,” he wrote.

Lee has pushed for several years for radical simplification of the corporate tax code, and the integration of both corporate-level and investor-level taxes. A previous blueprint he wrote with Sen. Marco Rubio of Florida, which Rubio featured in his presidential campaign, would have set the single integrated corporate tax rate at 25 percent. Today, corporate income is taxed at 35 percent and dividends and capital gains are taxed at up to 23.8 percent.