A group of economists, including Laurence Kotlikoff of Boston University, have simulated the economic and budgetary effects of eliminating the corporate tax. Though their “life-cycle” model is significantly different from ours, their results are similar in that they find eliminating the corporate tax would lead to a big increase in investment, jobs, wages, and GDP: We find that eliminating the U.S. corporate income tax with no changes in the corporate tax rates of the other regions can produce rapid and dramatic increases in U.S. domestic investment, output, real wages, and national saving. These economic improvements expand the economy’s tax base over time, producing additional revenues that make up for a significant share of the loss in receipts from the corporate tax. Follow William McBride on Twitter
