Why Does MSCI Fight For Comprehensive Tax Reform? The Tax Foundation Has The Answer
MSCI’s partners at the S Corp Association alerted us to a new report from the Tax Foundation that stresses the importance of comprehensive (rather than corporate-only) tax reform. The foundation notes:
- Corporate-only tax reform leaves out nearly 95 percent of all businesses from tax reform.
- Revenue neutral corporate tax reform that eliminates business tax expenditures in exchange for a 25 percent corporate tax rate could increase taxes on pass-through businesses.
- Revenue neutral corporate tax reform that increases taxes on pass-through businesses would reduce the size of the economy by 0.2 percent or $36 billion in the long run due to the increased cost of capital in the pass-through sector.
- In isolation, the impact of the elimination of business tax expenditures for pass-through businesses has a significant negative impact on the economy, reducing GDP by 0.5 percent or $84 billion in the long run.
As Connecting The Dots readers will recall, earlier this year MSCI wrote to leaders on the U.S. Senate Finance Committee and the U.S. House Ways and Means Committee to urge them to reconsider their preference for corporate-only reform. While Ways and Means Committee Chairman Paul Ryan (R-WI) last week indicated he is focusing on a more limited tax reform package that addresses international inequities, MSCI’s partners have indicated Ways and Means and Finance committee leaders have heard our pleas and are reconsidering their position in favor of corporate-only reform.