Letter to Editor: Getting Something Better Than Today’s Corporate Tax
Published in Wall Street Journal
Regarding Sen. Ron Wyden’s “We Must Stop Driving Businesses Out of the Country” (op-ed, May 9): Even discussing the possibility of comprehensive tax reform in the current political climate has become a heroic act.
However, focusing only on the corporate tax rate is shortsighted. Widening the base by eliminating important provisions for investment, such as accelerated depreciation, the domestic production deduction, last-in, first-out accounting and many provisions related to mining and oil and gas extraction would increase the cost of capital for many industries. In fact, a recent study by Ernst & Young conducted for the American Council for Capital Formation shows that a reform plan that is similar to the ones currently on the table would increase the cost of capital for new investment in the corporate sector by 5%. Some industries, such as chemical manufacturing, will get hit by a whopping increase in the cost of capital by 14%.
Maybe it is time to consider a plan that allows for full expensing of all new investment, which would be more conducive to the economic growth that this country has been craving.
Pinar Çebi Wilber
American Council for Capital Formation