Paulson Targets Business-Tax Trauma

Treasury secretary outlines Thursday conference to study the damage caused by corporate levies on economic growth in a global economy, and how much "distortion" they create.

Adding another platform to the ones he has taken recently on accounting, auditing, and the state of capital markets, Treasury Secretary Henry Paulson will lead a Thursday panel in Washington tackling the inequities and competitive disadvantages caused by America’s system of business taxes.

Announcement of the “Treasury Conference on Business Taxation and Global Competitiveness” — with Paulson being joined by his undersecretary for domestic finance, his assistant secretary for tax policy, his deputy assistant for tax analysis, and others — was accompanied by a 52-page background paper. Its themes included a look at how “special provisions narrow the business tax base,” and “the various ways the tax system distorts economic decisions.”

Other topics include a comparison of U.S. business-tax levels with those among major trading partners and emerging-market countries, and a review of the importance of the non-corporate sector, where individual tax rates prevail over business rates.

The thrust of the conference seems aimed at beginning to clarify and correct the fragmented, uneven tax system that has evolved over the years, which Paulson suggests has done damage to the U.S. economic system. “Maximizing economic growth requires that a tax system raise a given amount of revenue with the least possible interference in economic decisions,” the background paper says. “Our current system for taxing businesses and multinational companies has developed in a patchwork fashion spanning decades, resulting in a web of tax rules that can harm the competitiveness of U.S. companies.”

Additional panelists are yet to be determined, according to a Treasury Department announcement. Current participants are Undersecretary Robert Steel, Assistant Secretary Eric Solomon, and Deputy Assistant Secretary Robert Carroll.

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