A better approach would be to scrap this whole way of thinking about corporate taxes and start over. The goal should be better treatment of business investment, which the current code treats much worse than consumption. Rep. Devin Nunes, R-Calif., has a proposal that would treat business investment much better and sustain revenue by ending the tax break for corporate debt. Nunes also wants the corporate rate to decline, but his idea would be a step in the right direction even if it did not.
Businesses that rely heavily on debt would oppose anything resembling this idea, of course. That’s fine. The goal of reform shouldn’t be to make any group of businesses happy but to create a more rational tax code and a stronger economy. Like the Baucus plan, a pro-investment, anti-debt reform would produce winners and losers in the business world. At least in this case, though, they would be the right winners and losers.