The Corporate Tax Simplification Delusion

The Washington tax policy groupthink says that the optimal reform is to purge the federal corporate tax code of the myriad credits and deductions and then use the resulting savings to lower the rate. But this groupthink is based not on evidence, but on ideology. In fact, the dogged faith in simplicity will trump efforts to reshape the code as a driver of innovation and U.S. competitiveness, and it will result in less, not more, growth and jobs. Instead, the tax code should focus on expanding exemptions and incentives that spur innovation and growth-enhancing activities like R&D and investments in new machinery and equipment, while eliminating ineffective ones.