“It’s not fair,” my younger son would rant when, as a 5-year-old, life did not go his way.
I resonated to my son’s childhood dyspepsia as I listened last week to Apple’s chief executive officer, Tim Cook, defend his company’s use of perfectly legal accounting tricks to insulate billions upon billions of dollars of profit from U.S. taxes. His description before Congress of the way Apple skips past a loophole-ridden corporate tax code violated my sense of fair play as well as my populist instinct to go after fat cats.
But now a few days have elapsed. My inner economist has regained control. Yes, the corporate tax code cries out for change. But the right change would involve as many pro-business carrots as it does anti-business sticks.
Here’s a ridiculously smart plan, developed by economists who think about this subject all the time, that would raise some corporate rates but lower others. On balance, the plan would leave us with a simpler tax code that cuts out corporate trickery and encourages new investment.