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The Future of the Corporate Tax

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Green Money 00   Sunday, 08/31/14 12:19:30 PM
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The Future of the Corporate Tax

AUG. 30, 2014

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The Future of the Corporate Tax

TO THE EDITOR:

In “How to Fix the Corporate Tax? Repeal It” (Economic View, Aug. 24), N. Gregory Mankiw addressed the issue of tax inversions — when an American company merges with a foreign one and reincorporates abroad — by suggesting the corporate tax be replaced with a consumption tax.

Professor Mankiw wrote that “a corporate chief who arranges a merger that increases the company’s after-tax profit is doing his or her job,” and that “to forgo that opportunity would be failing to act as a responsible fiduciary for shareholders.”

He would certainly be correct if such arrangements were as straightforward as, say, claiming a home mortgage interest deduction when filing your personal tax return. But the argument ignores the fact that the tax planning of multinational corporations is not nearly so cut and dried. It involves teams of legal experts who devise sophisticated ways to push the boundaries of what may be permissible under law — ways that are beyond the reach of average and low-income taxpayers. It is this discrepancy that makes such arrangements so concerning.

AYALON ELIACH

NEWTON CENTRE, MASS., AUG. 24

The writer, a tax lawyer, is director of the tax initiative at the National Association of Consumer Advocates.

TO THE EDITOR:

Kudos to Professor Mankiw for addressing the crux of the problem of tax inversion. Officials verge on the Orwellian when they call responsible corporate managers “unpatriotic” or “corporate deserters” just for trying to keep their taxes as low as possible.

Recently, there have been moves in Washington to build what can only be considered a regulatory wall to prevent future inversions. It is discomforting that officials who should be well versed in the attributes of our free enterprise system would prefer to build a wall rather than work toward reform.

EDWARD T. GIGNOUX JR.

DUNWOODY, GA., AUG. 24

Letters for Sunday Business may be sent to sunbiz@nytimes.com.

A version of this letter appears in print on August 31, 2014, on page BU6 of the New York edition with the headline: The Future of the Corporate Tax. Order Reprints|Today's Paper|Subscribe


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