US Federal and State Corporate Tax Simplification

Robert Kao¹, John Lee^2
(1. School of Business, Park University, USA; 2. Rigel Technology Corporation, USA)

Abstract: The recent tax reform suggests that the corporate income tax rate will reduce from the current high of 35% to a new low level of 28%. Eventually, the corporate tax will become revenue neutral in the long run and raise revenues in the first few years of imposition. In other words, the proposed tax reform would mean an expansion of the U.S. corporate income tax base. In this paper, a new linear and gradual (LG) tax system has been developed and analyzed to improve the current progressive tax systems. The implied LG tax system could not only simplify our current complicated federal and state corporation tax systems but also reduce substantial processing time and managing costs for businesses and governments. The research findings include federal and state governments’ tax calculations, analyses, and projections with reduced tax brackets from current systems.

Key words: tax reform; corporate tax; linear and gradual tax system

JEL codes: G18, H21, H25, H71, C02