U.S. corporate income tax policy is currently riddled with problems and in dire need of reform, Treasury Department official Mark Mazur stated during a lecture focused on current issues in taxation.
Mazur, an assistant secretary for tax policy, emphasized the U.S. corporate income tax policy rate is high relative to other countries, and that this situation makes it easier for companies to do business overseas, according to Accounting Today.
Corporate tax landscape has changed
While speaking at the 15th Annual NYU/KPMG Tax Lecture Series, he spoke to how the landscape for business taxes has changed over the years, the media outlet reported. Following the Tax Reform Act of 1986, the U.S. corporate income tax rate - which was 34 percent at the time - was one of the lower rates for industrialized economies.
However, Mazur noted that while rates fell in many countries, they climbed slightly in the world's largest economy, reaching 35 percent, according to the news source. Because of this, the government official pointed out that U.S. taxes have become high relative to the nation's peers.
Corporate Income Tax Policy reform proposals
The high corporate income tax rate levied by the U.S. has taken front stage in policy discussions, and several prominent lawmakers have already proposed new approaches. President Barack Obama outlined several different changes he would enact during the State of the Union address, which include cutting the corporate income tax's top rate to 28 percent, making depreciation lives longer and levying a minimum tax on all profits earned overseas.
Sens. Marco Rubio (R-Florida) and Mike Lee (R-Utah) also offered their own proposal, which would reduce tax burdens for companies by allowing them to take part in full expensing and also lowering their top income tax rate to 25 percent. Rep. Dave Camp (R-Michigan) has presented a plan as well, which would make the same reduction in the corporate income tax to 25 percent but also scrap the Alternative Minimum Tax for corporations and pass-through entities.
Urgent need for change
Many different options for reform are on the table, and Mazur stressed the urgency of taking things in a new direction, the media outlet reported. Currently, the system of corporate taxes is "inefficient," "overly complex" and having too many loopholes. Mazur asserted that while our system of corporate taxes is supposed to be world class, it no longer operates this way, and reform is needed to return policy to this state.