Jan 31, 2017
Business Tax in the U.S. is So Complex, Its Reform Must Be Big
In Milken Institute Review, a Guide to the Fiscal Math of “Pass-Through” Income
LOS ANGELES—In an article in the Milken Institute Review, Eric Toder, co-director of the Urban-Brookings Tax Policy Center, leads readers down the tortuous path of business tax reform, made even more circuitous by the rapid growth of enterprises (including those owned by President Trump) that pass through their taxable income to individuals. “The U.S. system for taxing business income has entered a zone of baroque complexity that defies efforts to sync it with both the way businesses are organized in the United States and the growing integration of the global economy,” he explains. “Something big has to give.”
Also in the latest Milken Institute Review, and available at MilkenReview.org:
Brad DeLong, an economist at the University of California, offers a spirited defense of “helicopter money,” the as-yet-unused stimulus tool that’s widely viewed as too good to be true. Just the ticket, he explains for dealing with stagnation in an era of low inflation and big fiscal deficits.
Jerry Taylor, the president of the libertarian Niskanen Center in Washington, explains why the time has come for a carbon tax to slow climate change – and why even Republicans who have listened to the siren song of the climate change deniers should rethink their position. “We know that hedging against very-high-damage scenarios is economically rational even if the probability of catastrophe is modest,” he writes. “And we can be pretty sure that a carbon tax would deliver more abatement for the buck than the alternatives.”
Eswar Prasad, an economist at Cornell and the Brookings Institution, offers a nuts-and-bolts primer on how China is using trade and investment to project power worldwide. “China is becoming a leader of the international community – not, as the West prefers, by being co-opted into existing institutions under the current rules of the game, but rather on its own terms,” Prasad writes.
Maureen Japha, director of regulatory policy at the Milken Institute’s FasterCures, outlines ways to smooth the speed bumps as “venture philanthropies” make deals with medical researchers unused to sharing control. “The new emphasis on sustainability on both sides is forcing all parties to reconsider how success will translate into income,” she writes. “What’s important to keep in mind, though, is that everyone agrees that the first priority is getting effective and efficient treatments to patients.”
Andreas Bergh, an economist at Lund University in Sweden, cautions policy wonks eager to imitate Sweden’s social and economic policies. “Surprising as it may seem to those who see Sweden as the triumph of the modern welfare state,” he writes, “Sweden’s success has largely been the result of trial and error, not to mention the beneficiary of the unintended consequences of public policy.”
Tom Healey, the coordinator of New Jersey’s bipartisan Pension and Health Benefit Study Commission, offers an insider’s view of the battle to contain the ballooning employee benefits of states and localities. “Unfunded liabilities are a disaster in the making that lurk behind a gray wall of numbers, graphs and pie charts,” he writes. “As Flint and Detroit found out, expecting the problem to recede with an uptick in the stock market or the wave of a consultant’s wand is simply delusional.”
Philip Martin, an economist at the University of California (Davis) analyzes the impact of the growing scarcity of cheap water and labor in transforming California agriculture. “The state’s giant farm sector offers a fascinating picture of markets and regulation at work on steroids,” Martin writes. “What is emerging is a leaner, less tradition-bound industry -- and that is good news for the millions of rural residents desperate to avoid the sort of rapid dislocation that devastated rustbelt manufacturing in the 1980s and 1990s.”
About the Milken Institute
The Milken Institute is a nonprofit, nonpartisan think tank determined to increase global prosperity by advancing collaborative solutions that widen access to capital, create jobs and improve health. It does this through independent, data-driven research, action-oriented meetings and meaningful policy initiatives.
# # #
The Milken Institute is a nonprofit, nonpartisan think tank determined to increase global prosperity by advancing collaborative solutions that widen access to capital, create jobs and improve health. It conducts data-driven research, convenes action-oriented meetings and promotes meaningful policy initiatives.