Richard Rubin, of The Wall Street Journal, thinks reforming these is not a straightforward proposition. To an extent, he’s right, as business and personal income taxes have become increasingly intertwined with each successive tax reform since Reagan.
The links between corporate and individual taxation inevitably lock policy makers in intractable disputes about popular deductions and the question that divides the parties most bitterly: is the US collecting enough money from wealthy individuals?
But this entangling, or more correctly, the concern about the entangling, simply overcomplexifies the problem.
It’s an easy thing to do conceptually, if political will is lacking, to reform business taxes. Keep in mind a single, core fact: businesses don’t pay very much of their tax bills already. Business taxes are just another cost center, whose value in large part is paid by the business’ customers in the form of higher prices that are set to recover, at the least, a significant fraction of that cost. Customers pay much of those business taxes.
The framing provides the answer. Cut through the Gordian business/personal income tax knot by eliminating the business tax altogether. This, aside from eliminating the tax pass-along to already taxed individuals, also eliminates disputes about popular deductions, credits, and so on: they go away with the taxes.
This also removes the non sequitur of whether business taxes are hitting the wealthy sufficiently. That question becomes focused on the personal taxes where it belongs and thereby brought into sharper relief.