Fact check: How would lowering the corporate tax rate and eliminating loopholes compare with current policy in terms of Tax Revenue and business health

1. Summary of the results

The analyses reveal a complex picture of how lowering corporate tax rates and eliminating loopholes would compare to current policy. The Tax Cuts and Jobs Act (TCJA) of 2017 provides a real-world example, having reduced the corporate tax rate from 35% to 21%, which is projected to reduce revenues by $1.3 trillion from FY2018-2027 ^[1]. However, the TCJA also included base broadeners such as limitations on deductions for net interest expense and net operating losses, which could raise over $1 trillion in revenue over a decade ^[1].

Corporate tax revenue has averaged $342 billion per year from FY2018-2024, which is lower than pre-TCJA projections ^[1]. The analyses suggest that further corporate tax hikes, including limiting corporate state and local tax deductions, expanding limits on corporate executive compensation, and increasing the stock buyback tax, could reduce long-run GDP and American incomes by more than 0.1% and reduce hours worked by more than 60,000 full-time equivalent jobs ^[2].

2. Missing context/alternative viewpoints

The original question lacks several critical perspectives that emerge from the analyses:

• Progressive viewpoint: The analyses reveal that extending the TCJA's provisions would increase the fiscal gap by nearly 50% and hurt most working families, especially low-income households ^[3]. This source recommends expanding public investment and raising federal revenue via taxes that mostly come from high-income households.
• State-level impacts: The analyses show real-world examples of how corporate tax policies affect state budgets. In Colorado, a $1 billion budget hole was created by GOP corporate tax cuts, leading Democrats to propose closing corporate tax loopholes that could generate $350 million in revenue ^{[4] [5]}.
• Specific loophole examples: The LLC loophole in Ohio is highlighted as benefiting wealthy individuals and large corporations without leading to significant job growth or economic development, instead draining resources from essential public services ^[6].
• Business competitiveness concerns: The Tax Foundation argues that increasing corporate taxes could undermine US company competitiveness and harm economic growth, noting that some TCJA base broadeners like the requirement to amortize research and development costs could penalize investment ^[2].

3. Potential misinformation/bias in the original statement

The original question appears neutral but omits several important considerations:

• Oversimplification: The question treats "eliminating loopholes" as universally beneficial without acknowledging that some provisions labeled as "loopholes" may serve legitimate business purposes or that their elimination could have unintended consequences on investment and growth ^[2].
• Missing distributional effects: The question fails to address how these policies would affect different income groups, with analyses showing that tax policy changes have significantly different impacts on working families versus high-income households ^[3].
• Lack of timeframe specificity: The question doesn't specify whether it's asking about short-term or long-term effects, which is crucial since the analyses show different impacts over various time horizons ^{[1] [2]}.
• Absence of implementation complexity: The question doesn't acknowledge the practical challenges of defining and eliminating "loopholes," as evidenced by ongoing debates about specific provisions like the LLC loophole in Ohio ^[6].

The question would benefit from acknowledging that powerful interests including corporations and high-income individuals have significant stakes in maintaining current tax advantages, while state governments and advocates for public services benefit from closing these loopholes to fund essential programs.