Echoing some issues raised in Hubbard's article, Kevin Hassett indicated that the corporate tax was not an effective way to raise revenues and suggested that lowering the rate would raise revenues. Overall, these results suggest that the corporate tax rate has little effect on corporate tax revenues as a percentage of GDP. If the corporate tax falls on owners of the corporation, or on capital in general, it contributes to a progressive tax system, since higher income individuals have more income from capital than from labor. Two studies have been based on data in the United States. Lower corporate tax rates would also reduce this distortion. Reducing Tax at the Firm Level and Increasing Individual Level Taxes; Shifting Between Corporate and Individual Form

Given the value of lowering the corporate tax rate to reduce the shifting of income into tax havens and concerns over the U.S. position among other countries, one change that would allow this reduction is to raise the tax at the individual level and use the revenues to lower the corporate tax rate. This approach also allows more scope for lowering corporate tax rates without creating sheltering opportunities for high-income individuals. Conclusion

Is there an urgent need to lower the corporate tax rate, as some recent discussions and analyses have suggested? The claims that behavioral responses could cause revenues to rise if rates were cut do not hold up on both a theoretical basis and an empirical basis. Studies that purport to show a revenue-maximizing tax rate of 30% contain econometric errors that produce biased and inconsistent results; when those problems are corrected the results disappear. Cross-country studies to provide direct evidence showing that the burden of the corporate tax actually falls on labor in some cases yield unreasonable results and prove to suffer from econometric flaws that also lead to a disappearance of the results when corrected. Similarly, claims that high U.S. tax rates will create problems for the United States in a global economy suffer from a misrepresentation of the U.S. tax rate compared to other countries and are less important when capital is imperfectly mobile, as it appears to be. Although these new arguments appear to rely on questionable data, the traditional concerns about the corporate tax appear valid. Although many economists believe that the tax is still needed as a backstop to individual tax collections, it does result in some economic distortions. These economic distortions, however, have declined substantially over time as corporate rates and shares of output have fallen. There are a number of revenue-neutral changes that could reduce these distortions, allow for a lower corporate statutory tax rate, and lead to a more efficient corporate tax system. To illustrate in the simplest fashion, suppose the remaining sector of the economy is a non-corporate non-traded sector of the economy whose price is denoted by a capital P:
(C3) 
This commodity has no taxes and if the effects on r and w are estimated, those can be used to determine the change in P.
What ultimately to be determined is the fraction of the tax, rK c (where K c is the capital in the corporate traded sector) that falls on labor, that is what share of Ldw, where L is total labor in the economy, is of rK c .
To derive the real change in wages, the change in nominal wage is divided by the change in total price level in the economy, or, if the corporate sector is responsible for (1-) of output in the economy the percentage change in real wage (which is denoted with a capital W) can be expressed as follows:
(C4) 
If s is the share of the burden falling on labor income, from equation (1), and .
Interest in corporate tax reform that lowers the rate and broadens the base has developed in the past several years. Some discussions by economists in opinion pieces have suggested there is an urgent need to lower the corporate tax rate, but not necessarily to broaden the tax base, an approach that presents some difficulties given current budget pressures. Others see the corporate tax as a potential source of revenue.
Arguments for lowering the corporate tax rate include the traditional concerns about economic distortions arising from the corporate tax and newer concerns arising from the increasingly global nature of the economy. Some claims have been made that lowering the corporate tax rate would raise revenue because of the behavioral responses, an effect that is linked to an open economy. Although the corporate tax has generally been viewed as contributing to a more progressive tax system because the burden falls on capital income and thus on higher-income individuals, claims have also been made that the burden falls not on owners of capital, but on labor income—an effect also linked to an open economy.
The analysis in this report suggests that many of the concerns expressed about the corporate tax are not supported by empirical evidence. Claims that behavioral responses could cause revenues to rise if rates were cut do not hold up on either a theoretical or an empirical basis. Studies that purport to show a revenue-maximizing corporate tax rate of 30% (a rate lower than the current statutory tax rate) contain econometric errors that lead to biased and inconsistent results; when those problems are corrected the results disappear. Cross-country studies to provide direct evidence showing that the burden of the corporate tax actually falls on labor yield unreasonable results and prove to suffer from econometric flaws that also lead to a disappearance of the results when corrected, in those cases where data were obtained and the results replicated. Many studies that have been cited are not relevant to the United States because they reflect wage bargaining approaches and unions have virtually disappeared from the private sector in the United States. Overall, the evidence suggests that the tax is largely borne by capital. Similarly, claims that high U.S. tax rates will create problems for the United States in a global economy suffer from a misrepresentation of the U.S. tax rate compared with other countries and are less important when capital is imperfectly mobile, as it appears to be.
Although these new arguments appear to rely on questionable methods, the traditional concerns about the corporate tax appear valid. While an argument may be made that the tax is still needed as a backstop to individual tax collections, it does result in some economic distortions. These economic distortions, however, have declined substantially over time as corporate rates and shares of output have fallen. Moreover, it is difficult to lower the corporate tax without creating a way of sheltering individual income given the low tax rates on dividends and capital gains.
A number of revenue-neutral changes are available that could reduce these distortions, allow for a lower corporate statutory tax rate, and lead to a more efficient corporate tax system. These changes include base broadening, reducing the benefits of debt finance through inflation indexing, taxing large pass-through firms as corporations, and reducing the tax at the firm level offset by an increase at the individual level. Nevertheless, the scope for reducing the tax rate in a revenue-neutral way may be limited.