We hear a lot of talk from elected officials of both parties about the need to lower the corporate tax rate. There is also talk that it be done in a revenue neutral manner. That might mean different things to both parties. It might mean that there would be some revenue boost from lower rates (Republicans) versus more of a number crunching exercise (Democrats).
In 2011, the Joint Committee on Taxation estimated that it would cost $717 billion over ten years to lower the corporate rate to 28%. Much of the revenue to make this revenue neutral comes from timing changes, such as slower depreciation. I think there will need to be an increase in the capital gains rate and cut back on some generous individual tax preferences (such as the exclusion for employer-provided health coverage and the home mortgage deduction) to help lower both the corporate and individual rates.
In accordance with Circular 230 Disclosure
Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.
Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.
Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.
Prior to joining SJSU, Annette was with Ernst & Young and the IRS.
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