Just wanted to follow up on some recent posts about Burger King’s much-discussed merger with Canada-based Tim Hortons. Whatever the fast-food giant’s full list of motivations for relocating its headquarters north of the border, the deal has drawn renewed attention to our abysmally inefficient corporate-tax system, which suffers from a high statutory rate, an Amazon rainforest of distortionary loopholes, and a worldwide scope that forces American multinationals to pay the equivalent of the steep U.S. tax rate on foreign-earned profits they wish to repatriate. Most other countries have a territorial corporate-tax system, albeit with various modifications. As Harvard economist Martin Feldstein has written, their multinationals generally “pay only a small token tax if they bring their after-tax profits back to their home country.”

A few weeks ago, right around the time of the Burger King/Tim Hortons announcement, another Harvard economist made a strong case for eliminating the corporate-income tax entirely. Writing in the New York Times, Greg Mankiw explained how corporate-tax repeal could fit within a larger tax overhaul:

“Perhaps the boldest and best response to corporate inversions is to completely rethink the basis of corporate taxation. The first step is to acknowledge that corporations are more like tax collectors than taxpayers. The burden of the corporate tax is ultimately borne by people — some combination of the companies’ employees, customers and shareholders. After recognizing that corporations are mere conduits, we can focus more directly on the people.

“A long tradition in political philosophy and economics, dating back about four centuries to Thomas Hobbes, suggests that the amount that a person consumes is the right basis for taxation. A broad-based consumption tax asks a person to contribute to support the government according to how much of the economy’s output of goods and services he or she enjoys. It doesn’t matter whether the resources for that consumption come from wages, interest, rent, dividends, capital gains or inheritance.

“So here’s a proposal: Let’s repeal the corporate income tax entirely, and scale back the personal income tax as well. We can replace them with a broad-based tax on consumption. The consumption tax could take the form of a value-added tax, which in other countries has proved to be a remarkably efficient way to raise government revenue.

“Some may worry that a flat consumption tax is too easy on the rich or too hard on the poor. But there are ways to address these concerns. One possibility is to maintain a personal income tax for those with especially high incomes. Another is to use some revenue from the consumption tax to fund universal fixed rebates — sometimes called demogrants. Of course, the larger the rebate, the higher the tax rate would need to be.

“Major tax reform may be too much to hope for, given the current dysfunction in Washington. Nonetheless, it’s worth keeping the possibilities in mind. Corporate tax inversions aren’t the largest problem facing the nation, but they are a reminder that a better tax system is within reach, and that only politics stands in the way.”

The case for corporate-tax repeal has also been made by journalists Megan McArdle and Kevin Williamson, along with Boston University economist Laurence Kotlikoff. According to research by Kotlikoff and other analysts, “eliminating the United States’ corporate income tax produces rapid and dramatic increases in American investment, output and real wages, making the tax cut self-financing to a significant extent. Somewhat smaller gains arise from revenue-neutral corporate tax base broadening, specifically cutting the corporate tax rate to 9 percent and eliminating all corporate tax loopholes. Both policies generate welfare gains for all generations in the United States, but particularly for young and future workers. Moreover, all Americans can benefit, though by less, if foreign countries also cut their corporate tax rates.”