The future of the corporate tax

Recent calls for increased entity-level corporate income taxation of multinationals, on both a source and a residence basis, have a distinctly back-to-the-future cast. At least as to the bottom line, they have far more in common with 1986-era thinking than with which has often prevailed in more recent decades. However, their intellectual basis has substantially changed, reflecting the evolution of economic thinking to reflect twenty-first century trends. This historical back-and-forth has ample parallels in other areas, and precedents from earlier eras. In corporate and international tax policy, as well as with regard to taxing capital income and addressing high-end inequality more generally, the rise of standard neoclassical Econ 101 precepts that, in the preceding period, had been underappreciated was succeeded by a growing awareness of what those precepts leave out. Meanwhile, the popular back-and-forth has reflected fluctuating public perceptions regarding, not just the importance of distributional issues, but also unfettered free market capitalism’s merits and performance.