Mihir Desai

An op-ed by Mihir Desai and Edward Kleinbard. President Trump’s spokespeople have made it perfectly obvious that he will not release his federal income tax returns during his presidency. Appeals to the tradition of presidents publishing their returns will not change this president’s resolve. Nor is a more forceful approach likely to pry the returns into public view.

On Thursday, White House press secretary Sean Spicer said something sufficiently confusing that for a minute, people believed that the Trump administration intended to raise funds for a border wall by imposing a 20 percent tariff on all imports from countries with which the U.S. runs a trade deficit— including Mexico. It soon became clear that Spicer was not talking about a tariff per se, but something more like the House GOP’s border adjustment tax..."A border tax adjustment is not really a tariff, and it's not typically country specific or good specific. A border tax adjustment is part of a larger tax system where they're trying to tax consumption, and the adjustments are ways to make sure that the tax base is in fact domestic consumption," says Mihir Desai, an expert in tax policy and international finance and a professor at Harvard Business School and Harvard Law School. Desai says that one of the advantages of passing off a border adjustment as a tariff might just be political convenience, characterizing a tax overhaul (which Republicans support) as a protectionist measure. But the border adjustment might be preferable to actual tariffs, which could lead to a trade war.

Corporate tax reform may be the issue with the highest degree of consensus among Republicans and Democrats. But when it comes to most issues regarding personal taxes, it’s been hard for those on both sides of the aisle to agree. That said, in a recent Harvard Business School (HBS) study on competitiveness, professor Mihir Desai explained there is one key area where both sides seem to agree: a minimum tax on the highest earners. While personal tax reform “cuts a little closer to home” than corporate tax reform, according to Desai, changing the tax brackets at the highest level is something that would have a real revenue impacts without too much resistance. Desai, who is both a business and law professor at Harvard, explained that there is a distinct opportunity for a new top tax bracket, especially given the changing composition of the current brackets.

An op-ed by Mihir Desai. Removing the incentive for American companies to move their headquarters abroad is a widely recognized goal. To do so, the U.S. will need to join the rest of the G-7 countries and tax business income only once, in the country where it was earned. Notably, this principle—called territoriality—is included in the bipartisan framework for international tax reform developed by Sens. Rob Portman (R., Ohio) and Charles Schumer (D., N.Y.) in 2015. Unfortunately, recent reform proposals have a serious flaw: a “minimum tax” on foreign business income. This flaw is in President Obama’s fiscal 2017 budget, and Republican presidential front-runner, Donald Trump, has broached a similar idea on the campaign trail.

An op-ed by Mihir Desai. Complaining about the complexity of the tax code has become a treasured ritual during spring tax season. The code has grown ever more complex and this complexity has considerable costs. As one example, the incredible complexity of tax incentives for education limits uptake and redistributes wealth away from those targeted and toward sophisticated taxpayers. How could we transform this ritual of complaining into spring cleaning? Addressing complexity in the tax code requires analogizing to other complex systems and drawing on the research that demonstrates how to manage that complexity. Indeed, there is a well-developed literature on how to manage complex systems that can provide the foundation for simplifying the tax code. In particular, we know a lot about how to manage the evolution of software codes. This analogy yields two primary lessons.

On Tuesday, March 17, two professors from Harvard Law School, Laurence Tribe ’66 and Stephen Shay, will testify before Senate committees. Last week, Harvard Law School Professor Mihir Desai and Visiting Clinical Professor T. Keith Fogg testified before the U.S. Senate Committee on Finance.

Just months after the Obama administration cracked down on mergers that helped U.S. companies skirt domestic taxes, a wave of foreign takeovers is steering more tax revenue away from Uncle Sam. In deals known as “tax inversions,” which spiked in 2014, U.S. companies acquired foreign rivals and redomiciled in low-tax countries, reducing the taxes paid back home. ...Taxes “aren’t the afterthought” anymore in deal making, said Mihir Desai, a Harvard business and law professor, at a recent tax conference. “They are, in fact, a leading thought in the design of these [cross-border] transactions.”

There’s growing bipartisan interest in tapping a new source of revenue to pay for highways, light rail systems, and other infrastructure: the nearly $2 trillion of U.S. corporations’ earnings now held overseas. President Barack Obama has proposed a one-time tax of 14 percent on those earning...But as infrastructure funding becomes entangled in the effort to enact corporate tax reform, the complexities will grow. There are voices of caution. One is Mihir Desai, a professor of finance at Harvard Business School and a professor of law at Harvard Law School. Here are excerpts of our conversation with Desai Thursday, starting with his comment on the need for broad corporate tax reform:

In recent years, a number of U.S.-based corporations with significant international holdings have shifted their headquarters overseas in an attempt to lower their tax bills. The process, known as corporate or tax “inversion,” is designed to avoid America’s high corporate tax burden. At 35 percent, the U.S. nominal corporate tax rate is highest among member nations in the Organization for Economic Cooperation and Development (OECD)…[Harvard Law School Professor Mihir] Desai spoke with the Gazette via email about the factors driving the practice of tax inversion, and also provided links to research around the topic.

The chorus of voices on Capitol Hill calling for an end to corporate inversions grew louder on Tuesday as the Senate Finance Committee held a hearing on the issue of American companies reincorporating abroad, and legislators proposed new punitive measures against inverted companies…But while agreeing that the current system is broken, Mihir A. Desai, a professor of law at Harvard University, said punitive legislation could be counterproductive. “Legislation that is narrowly focused on preventing inversions or specific transactions runs the risk of being counterproductive,” he said. ”For example, rules that increase the required size of a foreign target to ensure the tax benefits of an inversion can deter these transactions but can also lead to more substantive transactions.”

The rush is on for big U.S. companies to lower their tax bills. They do it by merging with foreign companies in countries with lower rates and officially moving their home base. The strategy is called "inversion," and it's legal. But is it un-patriotic? …The trend of U.S. companies moving abroad is more a testament to, among other things, "the importance of non-U.S. markets for U.S. firms," said Mihir Desai, a Harvard professor of finance and law. "Rather than questioning the loyalties of executives it is critical to understand these underlying ... forces."