How a Carbon Tax Could Save Corporate Tax Reform

August 18, 2017

In prioritizing key elements of tax reform, Republican leaders abandoned plans for a so-called border adjustment tax on imports. It had proved controversial, but it would have raised $1 trillion over 10 years. As Joe Kennedy explains in The Hill, this creates a quandary: How can Congress significantly reduce America’s 35 percent corporate rate (one of the world’s highest) and strengthen key incentives such as expensing for capital equipment and the R&D tax credit (which drive innovation, productivity, and competitiveness) without adding to the deficit? The answer is with a carbon tax.