Tax Policy Center | www.taxpolicycenter.org

Corporate Tax Reform: Can We Repeat 1986?

Eric Toder

Urban-Brookings Tax Policy Center

2

Fewer Business Receipts Face Corporate Income Tax

1986 1994 2001 20080%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Flow Through EntitiesC Corporations

Tax Policy Center | www.taxpolicycenter.org

3

Dividend Taxes Paid at Corporate and Individual Level

1985 1988 1993 2001 2003 20130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Individual ShareCorporate Share

Tax Policy Center | www.taxpolicycenter.org

4

Largest Corporate Tax Expenditures, 2013-17

Corporate Revenue Loss

Individual Revenue Loss

Total Revenue Loss

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Expensing of R&D costs

Low-Income Housing Credit

Deduction for US Production

Deferral of Income of CFCs

Accelerated Deprecia-tion

Tax Policy Center | www.taxpolicycenter.org

5

Corporate Base Broadening, 1986 Tax Reform Effect on Corporate Receipts in

1987-91

By Provision By Type$0

$50,000,000,000

$100,000,000,000

$150,000,000,000

$200,000,000,000

$250,000,000,000

$118.9 B(50.1%)

$60.3 B(25.4%)

$22.2 B$11.5 B

$9.2 B$14.9 B

Net Change in Receipts$120.3 B

Corporate Rate Cuts

-$116.7 B

Corporate Rate Cuts

Net Change in Receipts

Other

Foreign Pro-visions

Insurance Pro-visions

Corporate AMT

Tax Policy Center | www.taxpolicycenter.org

6

Potential Revenue-Neutral Cut in Top Corporate Rate (Very Rough)

0%

10%

20%

30%

40%

24.7% 26.3%31.5% 33.1% 33.5%