Why Is the President Talking Corporate Tax Reform?

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July 30 (Bloomberg) -- New York University School of Law's Daniel Shaviro and Former IRS Commissioner Mark Everson discuss President Barack Obama's jobs speech of an Amazon fulfillment center in Chattanooga, TN. With Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

You listened to the president's speech and heard what hans nichols said as far as it being a nonstarter from the republicans point of view.

Why is he talking about corporate tax reform?

I can't talk about the political strategy is but everyone realizes the system is a terrible mess and the proposal at least purports to address some of those problems, but we could debate whether it's the right way or not.

Is it a terrible mess?

The system is a terrible mess.

That is true.

There are two good things as far as i'm concerned.

First, the president is engaging on tax reform.

We know from history unless the administration is actively involved, nothing will happen.

The other thing is he speaks about the importance of manufacturing and innovation.

We think those things are in -- those things are essential to job creation.

Your setup is entirely correct.

German kamp and chairman baucus have been toiling in the vineyards to get a comprehensive reform and this does undercut that.

It introduces politics into what had been a technical conversation about what to do about the code on the part of the tax writing committee.

So i'm not sure whether this helps anything in the long run.

I personally don't think it's going to get anywhere anyway.

There are too many differences of opinion.

People say that because it happened in 1986 that it can happen again but that's like saying because you won the lottery one day, you can play the lottery and win it again.

You say nothing is going to get done, but do we need reform to get corporations to bring the money back to the united states or is that something that would happen anyway?

We have a high nominal rate of 35%, but not many people pay that.

If you look at groups like apple, they are paying almost nothing at all.

We really need to address that.

Frankly , the people paying very little taxes are powerful on both sides of the aisle.

Making them pay more is a hard bipartisan proposal to run up the flagpole.

Are we spinning our wheels here because the actual tax corporations lay -- corporations pay is much less than the stated level and that's what we compare it against?

It's not true for all corporations.

There is a difference.

We really ought to run a system where similar economic activities are taxed in the same manner.

Chairman camp has been noteworthy in saying we have to look at the whole system and make sure there is continuity between what's being done for individuals and for corporations.

We cannot end up with lower corporate tax rates and personal tax rates otherwise you will form a new set of shelters and distorted behavior.

This is a potentially dangerous initiative if it is not handled correctly.

Lex -- i agree about this.

You have a big-time business idea, you form a corporation and get taxed at 25% and never pay yourself a salary.

Why should you?

As a garden-variety problem when you push corporate interest rates apart too far.

Doesn't make any sense that it is taxed at a higher rate than earned income?

It might.

You'd be surprised at academics academics on the left and the right talking about consumption tax.

We would have to define things a little differently than we do today but it might be very different in a setting like that.

What has to happen with the political landscape to get anything done on tax reform?

The president has said he's going to do everything he can to get to them control and immigration reform.

He has not up till now said that about immigration reform.

This is welcome again.

Fees going to devote the energy to work on tax reform, maybe we will get somewhere.

A we have to be careful it can't undercut what chairman camp and chairman baucus are doing.

What about the actual bureaucracy?

Do you think it is warranted?

We have talked about this on the show before.

There were a atrocious things that happened at the service.

It's important governmental institution and the president will hopefully report a new commissioner and transparency.

It does need to be top early funded because it has significant responsibilities.

In the affordable care act, it has a lot to do as well.

Is there any possibility tax code will become simpler to implement and as a result, that whole layer of individuals and corporations designed to comment and analyze the tax structure will somehow get smaller?

No one ever gave money to congress to make the code simpler.

A lot of people like complexity.

We have the whole situation that leads to complexity and you have questions.

The question of where apple earned its money is not an easy problem to solve.

If you have simple rules, they better be well drafted because otherwise people will eat into that.

Thank you very much for joining us.

This text has been automatically generated. It may not be 100% accurate.


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