Repeal SALT Cap, Raise Corporate Tax: Bloink & Byrnes Go Thumb to Thumb

Bloink: Professor Byrnes is obviously exaggerating when he claims that a two-to-seven percent corporate tax hike would be a disaster, when major corporations scored a 14 percent decrease in tax rates just last year. The unpopularity and unfairness of the SALT cap is clear, and legislators from high tax states are not going to stop until they find a way to offer a more fair tax position to their residents. Using a slight corporate tax hike to support repeal of the SALT cap seems like a small price to pay for fairness and equality among the states.

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Byrnes: Professor Bloink and those who share his views are underestimating how beneficial a competitive corporate tax environment will be to the nation as a whole. Taxpayers who are subject to the SALT cap benefit from a robust economy in the same way that taxpayers who live in low tax states benefit. That sounds like equality to me.

Bloink: And Professor Byrnes and those who share his views are failing to recognize that tax reform was supposed to benefit everyone from a tax perspective-Republican claims that all taxpayers got a tax cut fall flat when you look at taxpayers in high tax states who are now seeing even higher taxes because of the SALT cap. No one is proposing a corporate tax increase that would bring us back to pre-reform levels, but a few percentage points could provide the benefit of a SALT cap repeal for individual taxpayers while still allowing a significant tax break for corporations when compared to pre-reform law.  It seems to me that everyone wins here.

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Byrnes: Everyone does not win if we go back on our promise to corporations. Corporations have taken actions in reliance on the 21 percent rate, we need to give this reduction a chance to work before we rashly jump in and increase the rate again—even by a few percentage points. When corporations can't rely on tax cut promises, that's bad for the economy as a whole, and a struggling economy is bad for everyone.

Bloink:  Raising the corporate tax rate to only 25 percent would raise about $1 trillion in revenue, which is far more than the SALT cap generates. We could not only repeal the SALT cap, but could dedicate funds to infrastructure projects and other projects and programs that are in dire need of federal funding.

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Byrnes: And the higher profits seen by corporations because of the tax reduction will also generate significant tax revenue if we only give the tax reform rates time to work. It's been one year, and we cannot now go back on our promises to help support American businesses.

Bloink: The bottom line is that corporations received a windfall under the Tax Cuts and Jobs Act, which was passed hastily and without bipartisan support. Now is the time to fix some of the problems with the reform package to generate more equality among all taxpayers, and provide a more even distribution of benefits between corporations and individuals.

— More Bloink & Byrnes Go Thumb to Thumb:

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• Should Annuity Products Get a Fiduciary Safe Harbor?
• Should Tax Hikes Need Supermajority Vote?
• Does DOL's HRA Proposal Go Far Enough?
• Should 2017 Tax Changes Be Permanent?
• Is the Proposed Child Tax Credit Even Needed?
• Is Inflation Indexing of Capital Gains Good?
• Are New USA Plans a Boon to Savers?
• Was It Right to Kill the DOL Fiduciary Rule?
• Is DOL Rule on Health Plans Bad?
• Trump's RMD Rule Change