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Resumen.

Bibliografía.

The 2017 Tax Legislation introduced two significant new tax preferences for businesses: a reduction in the corporate rate to a flat 21 percent and the 20 percent deduction for pass-through income under Section 199A. Advocates of the legislation justified these preferences in part as a way to encourage new business investment and as a response to international tax competition. However, Congress failed to effectively achieve these goals by appropriately targeting these preferences on an economically coherent category of business income — such as the normal returns to new investment — and by protecting the domestic tax base as they addressed international pressures. Instead, the law extends its tax cuts to a variety of economic returns, including returns to labor of highly-compensated domestic service providers, but only if income is earned in certain forms and in certain sectors of the economy. As a result, the legislation generates substantial new inequity, tax planning opportunities, and administrative challenges for the IRS — none of which was necessary to increase investment and reduce international profit shifting.