A Democratic Senator wants to raise $200 billion over ten years by closing corporate tax loopholes, according to Bloomberg News. Sen. Carl Levin (D-MI) wants to ditch a slew of goodies for corporations, as well as a loophole that allows wealthy money managers to pay far less in taxes than middle-class families:
Senator Carl Levin’s push to close tax loopholes will target corporate deductions for stock options and rates on investment income known as carried interest, seeking to raise at least $200 billion by one estimate.
In a memo to Democratic Senate committee leaders on Friday, the Michigan Democrat described proposals to end what he called excessive corporate tax deductions, scrap the blended tax rate for derivatives such as commodity futures and strengthen enforcement of the tax code, Bloomberg BNA reported. […]
The plan is estimated to raise at least $200 billion over 10 years, according to a person with knowledge of the details. Levin told reporters he was sharing ideas with fellow senators and had asked the congressional Joint Tax Committee to estimate budget costs and savings for the provisions.
Republicans (and plenty of Democrats) like to talk about revenue-neutral corporate tax reform, in which every dollar raised if offset by a reduction in the corporate tax rate. Levin has consistently opposed this approach, and for good reason.
Corporate profits are currently at record highs while corporate taxes have plummeted. Corporations paid just a 12.1 percent effective tax rate in 2011. The corporate income tax used to make up about one-third of federal revenue, but today it makes up less than 9 percent. The corporate income tax used to follow along with corporate profits, but the two have become decoupled, with negative impacts for the federal budget:
As former White House economist Jared Bernstein noted, “locking in these historically low revenue levels, either as a share of GDP, total receipts, or profits, would be yet another self-inflected wound.”