Media Alert

For Immediate Release May 22, 2001  

Bartlett Applauds O'Neill's Remarks About Abolition Of Corporate Tax

NCPA's Scholar Says It's a Double Tax; Reform Long Overdue

WASHINGTON, D.C. (May 22, 2001) - The Bush Administration may soon push forward on fundamental restructuring of the U.S. tax system, which would include abolition of the corporate income tax, according to remarks made by Bruce Bartlett, senior fellow at the National Center for Policy Analysis (NCPA). Treasury Secretary Paul O'Neill hinted at such a strategy in a weekend interview in the Financial Times. Bush, both as candidate and president, has mentioned restructuring the federal tax system as one of his long-term goals.

"The corporate income tax is a double tax. It's that simple," Bartlett said. "Abolition of this tax is the one economic strategy that Ronald Reagan, Jimmy Carter, former Treasury Secretary Bill Simon and Americans for Democratic Action can agree on."

Bartlett says double taxation of corporate profits has a number of unfavorable economic consequences. Corporate income taxes:

  • Discourage savings and investment.

  • Encourage corporations to finance growth through debt rather than equity.

  • Discourage payment of dividends, since it makes more sense for corporations to retain earnings or buy back shares.

  • Act as a veil between a corporation's owners and managers, sometimes leading to mismanagement or even bad management.

"Retaining corporate income taxes can push effective federal income tax rates as high as 60 percent and its deleterious effects are widespread," Bartlett added. "Just think, almost everyone who owns a share of common stock is taxed twice."

Bruce Bartlett's columns are distributed nationally by Creators Syndicate.

The NCPA is a 501(c)(3) nonprofit public policy organization. We depend entirely on the financial support of individuals, corporations and foundations that believe in private sector solutions to public policy problems.

The NCPA is headquartered in Dallas, Texas, with an office in Washington, D.C.

For more information:
Richard Walker, Dallas, TX 972-386-6272
Sean Tuffnell, Dallas, TX 972-386-6272
Joan Kirby, Washington, DC 202-220-3082
 Internet: http://www.ncpa.org

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