Harvard Business Profs: How to the US Should Tax Businesses

Harvard Business School professors Mihir Desai and Bill George lay out interesting changes that could help the US gain an advantage from a tax standpoint. They note that the US should move to a territorial tax system rather than a world-wide system (the UK and Japan recently made such moves). To offset the decreased revenues they propose taxing flow-through entities (partnerships and S-Corps), as well as their owners. The second source of revenue would come from changing the fact that corporations report large profits to the capital markets and relatively small profits to tax authorities - meaning, we make it more the case that corporations have to base their taxes on profit reports to capital markets.