Don't Lower Corporate Taxes. Abolish Them.

Lowering the corporate tax rate appears to be all the rage. Donald Trump has promised a cut to 15 percent from 35 percent in the U.S., and British Prime Minister Theresa May has pledged to make the U.K.'s corporate tax the lowest in the G-20, which would mean taking it lower than Trump intends to.

On the surface, it looks as though international tax competition is heating up. Trump's move can potentially change the business logic of U.S. multinationals, which now prefer to stash international profits -- more than $2.5 trillion of them -- overseas. May's pledge appears to be aimed at making it more attractive to invest those profits in the U.K. It's difficult to calculate the exact effect of lowering the top-line rates, though, because hardly anyone pays them. Now that business-friendly governments appear to have some leeway, they should go back to the old idea of eliminating corporate levies and just taxing personal income and consumption.