Mar 9, 2017

Ron Johnson: ditch corporate tax for tax on ownership

Investors are waiting patiently for the corporate tax cut President Trump promised them, but they may not love the final product.

House Republicans have been pushing for a border-adjusted corporate tax, which would enable lowering the headline rate by raising taxes on imports. But some lawmakers are skeptical because such a scheme would pinch retailers and consumers. As an alternative, Senator Ron Johnson of Wisconsin has proposed raising revenue by taxing investors for their share of corporate profits, per the Wall Street Journal.

No free lunches: Trading corporate taxes for those on shareholders makes sense—investors are the ultimate beneficiary for corporate profits. But if the goal is to promote more investment, higher taxes investors won't do the trick, as they make it more difficult to raise capital in the stock market.

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