Businesses Should Support VAT to Achieve Corporate Rate Cut

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If corporate taxpayers are sincere about reducing the nominal income tax rate, they must be willing to help federal policymakers implement a broad-based value-added tax to offset revenue losses, a tax policy analyst tells a conference of tax lawyers. Harry Gutman, chief of KPMG's Federal Tax Legislative and Regulatory Services, says there is not enough money in the current list of corporate tax exemptions, credits, exclusions, and deductions to make a meaningful dent in the nominal rate of 35 percent. Gutman, a former chief of staff to the congressional Joint Committee on Taxation, says he favors tax code changes that remove some of these “preferences’’ and “distortions,’’ but a broader replacement revenue stream is also necessary. In the current context, he says some type of consumption tax makes the most sense.