John McCain expended a lot of time on the trail slamming America’s corporate income tax and lauding Ireland as a superior model. And guess what? McCain was right — Ireland is a better model. Unfortunately, McCain’s actual plan wasn’t to make our corporate income tax more like Ireland’s. Instead, he wanted to leave the loophole-ridden mess as it stands and then cut rates. But check out Ben Furnas’ chart:
As you can clearly see, Ireland raises more not less income from their corporate taxes. That’s because their lower rate is levied on a broader tax base, with many fewer loopholes. What’s more, reform of that sort not only can raise revenue, it boosts economic growth because the private sector allocates its resources the most efficient way possible and then just pays taxes on it, rather than expending lots of time and energy on trying to squeeze into the loopholes. I’m all for fiscal stimulus, but now would also be a nice time to undertake structural reforms of this sort that could boost growth while improving the long-term budget situation.