For example, the House Republican tax plan introduced last year would pay for tax rate<br />cuts in part by eliminating the tax deduction for state and local income taxes.<br />Because the United States runs a trade deficit, the tax would raise lots of money, which in turn could<br />be used to reduce the corporate income tax rate, perhaps to 20 percent from its current 35 percent.<br />President Obama proposed corporate tax changes that would have lowered the rate on<br />businesses to 28 percent from its current 35 percent while changing its structure.<br />The tax system would cause fewer distortions, because companies would have less incentive to relocate operations to low-tax jurisdictions.<br />Economists believe that imposing this tax would cause the value of the dollar to rise on currency<br />markets, which would offset the tax on imports, and so consumer prices wouldn’t rise.<br />Even economists who believe tax cuts generate growth do not believe that faster growth is enough to prevent lower taxes from increasing the deficit.
