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3 Fiscal Policy Forum 1 (1985)

handle is hein.tera/fisporum0003 and id is 1 raw text is: oliaf TAX FOUNDATION, INCORPORATED At Issue: Is Corporate Investment Income Taxed Too Lightly? T he burden on corporate-source in- come is already excessive, and lower investment, lower growth, re- duced competitiveness and fewerjobs would be the price for enacting the tax reform plan proposed by the Treasury Department last fall. This is the conten- tion of Jack F. Bennett, senior vice presi- dent and director of Exxon Corpora- . tion, in this issue of Fiscal Policy Forum. Is business now paying its fair share? Bennett asks. How would a revised plan, purporting to be neutral, impact taxation of business-related income? To the fair share question, Bennett I replies, Corporate profits have de- I clined as a proportion of total income in the country over recent years. Hence, it is not surprising that corporate taxes, as a proportion of total taxes, have also declined. Also, he adds, It is not possi- I ble to reach reasonable judgments just from selected short-period tabulations, since the essential activity of most cor- porations lies in investment projects I lasting over a number of years. ! II Corporate source income already bears a double burden, he points out, since it is taxed once at the corporate level, as earnings, and then at the share- holder level, as dividends. Government $ is taxing as income at both levels what $ in many cases really isjust return of capital when inflation is taken into ac- count. His conclusion: Treasury's plan would increase the total tax burden on corporate-source income and would impose on income earned through cor- porate investment activities a signifi- cantly higher aggregate tax rate than that imposed on other forms of in- come. Jack F. Bennett, senior vice president and director of Exxon since August 1975, has concentrated on financial and economic affairs in a career divided be- tween government service and his asso- ciation with Exxon. Prior to assuming his present position, he had served for almost four years in the Treasury De- partment, first as Deputy and later as Under Secretary of the Treasury for Monetary Affairs. Mr. Bennett also serves on the Tax Foundation's Board of Trustees. The views expressed herein are those of the author and do not necessarily re- flect those of the Tax Foundation, Incor- porated. TAX FOUNDATION, INCORPORATED One Thomas Circle, N.W., Suite 500 Washington, D.C. 20005 (202) 822-9050

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