1 Taxing Corporate Income: Comments

The primary focus of “Taxing Company Income”, written by three eminent authors, is to reconsider the Meade Report’s recommendation to tax corporate rents in light of evolving changes to the UK economy since 1978. Wisely, the authors focus on the impact of global economic integration on company taxation policy. I would agree that one cannot consider company taxation without thinking about international issues. After examining a rich array of possible tax bases, the authors come to an almost stark conclusion that little will work properly in raising revenue as businesses will shift income to low-tax jurisdictions – whether the tax is based on income or on rents on a source basis. Eventually, international considerations shall force governments to move towards a corporate tax that exempts exports and taxes imports, based on the destination principle. I believe that we are far from that point yet. Despite the rapid growth in cross-border investments since 19902, corporate income tax revenues as a share of GDP have been remarkably robust among OECD countries in the past 25 years (see Mintz and Weichenrieder (2007)). Governments are not about to abandon a tax base that raises almost 10 percent of their needs today