Tax Reforms

In early February, President Obama proposed a 14 percent tax on U.S. multinationals’ overseas earnings, plus a 19 percent minimum tax rate on future foreign profits. The proceeds would fix roads, bridges and other infrastructure. But this plan is contentious: "Raising taxes on our most innovative companies to fund ever greater unsustainable federal budgets is a recipe for disaster,” says Michael Faulkender, associate professor of finance and director of the Masters Program in Finance at the University of Maryland’s Robert H. Smith School of Business.

In this episode of Smith Business Close-Up with the Smith School, host Jeff Salkin sits down with Faulkender to talk about tax reforms.

Faulkender says the current tax code has made the U.S. less attractive for companies to locate here and expand operations here. He says the solution is to bring the tax rate in line with other advanced economies, paid for by reducing credits, deductions, and other loopholes.  He says the U.S. could make our corporate tax environment even more competitive by offering a corporate income tax rate below that of other advanced countries, paying for it by eliminating the lower personal income tax rate on dividends and capital gains.