A new coalition of 42 U.S. business leaders launched Tuesday to promote lowering corporate tax rates, the same day that analysts at the Economic Policy Institute (EPI) released a report showing there is no evidence that higher corporate taxation is associated with lower economic growth.
The Alliance for Competitive Taxation (ACT) features the heads of Google, Bank of America, Dow Chemical, Coca-Cola, UPS, Walmart, and 36 other major American companies. On their website, ACT endorses reducing the corporate tax rate to 25 percent, while closing loopholes to keep the overall package revenue neutral. The group is advised by former Congressional Budget Office (CBO) director Douglas Holtz-Eakin, who also runs the conservative American Action Forum, and former Chair of President Clinton’s Council of Economic Advisers Laura Tyson.
A “Myths vs. Facts” page on their site labels the statement “Businesses go abroad to avoid taxes” a “Myth,” while a week before the site launched, Apple executives were before a Senate panel explaining how they’d used Irish subsidiaries to avoid paying taxes on tens of billions in profits. Elsewhere on the site, ACT quotes Dr. Tyson as saying that “our current corporate tax system is standing in the way” of economic growth.
Meanwhile, EPI economist Thomas Hungerford explained in a report Tuesday that the supposed link between corporate tax rates and growth rates does not hold up to scrutiny. After examining the question from various directions – statutory tax rates, effective rates, effective rates on capital income overall rather than corporate income, inserting a one-year lag in the data to see if the putative growth effects were being hidden – Hungerford concludes that “there is no apparent association between the statutory corporate tax rate and economic growth.”