From NPR we learn that Burger King is eying a Canadian merger that will allow it to move its headquarters over the border and avoid a lot of U.S. taxes.
Such tax “inversions” or corporate “desertions” (according to President Obama) are a big hit, given the dissolution of patriotism in favor of CEO paychecks.
Addressing this issue, Greg Mankiw thinks big when proposing to end corporate taxation and replace it with a value-added tax.
This is a good idea, but it is incomplete (as he admits when pairing it with rebates for the needy and continued income tax on high earners).
I admit this is pie in the sky, but my preferred solution would be:
* Eliminate the corporate tax (sorry accountants!);
* Tax dividends and capital gains as ordinary income;
* Make up any shortfalls that result by somewhat increasing the income tax rate on high earners and by eliminating loopholes—most of the home mortgage interest deduction is a subsidy for wealthy families.
* Add a value-added tax.
Nothing is perfect and this approach has lots of flaws.
[Thanks to Maia Linask for the link to Mankiw.]