Don’t get me wrong. These issues do indeed have an impact on business decisions:
This means that if the compromise passes largely intact, the U.S. will have no permanent regime governing levies on salaries, capital gains and dividends, the Social Security tax, as well as a slew of targeted breaks for families, students and other groups. This on top of dozens of corporate-tax provisions that already were subject to annual renewal.
Nobody but tax lawyers and accountants is going to argue that the current tax system makes much sense.
And the paper is good at describing why the current system is the way it is (emphasis mine):
Political division contributes because of the daunting task of mustering a filibuster-proof 60 votes in the Senate. Legislative shepherds of the Bush cuts resorted to passage under what is called “budget reconciliation,” requiring only a majority vote. But a measure passed this way can’t be for longer than the budget that authorizes it, in this case 10 years. Hence the provisions expire in 2010.
Such an outcome is less likely in countries with parliamentary systems because these leave the government less subject to having its will thwarted by a large minority. “Very few countries have tax provisions that expire unless legislative action is taken,” says Jeffrey Owens, head of tax at the Organization for Economic Cooperation and Development in Paris. “Also, in most OECD countries, it’s the government that initiates new legislation, and once proposed the legislation generally passes.”
But the uncertainty meme is all too often PR in businesses anti-tax quiver. The real uncertainty that’s causing corporations to sit on that $2 trillion cash pile, rather than investing it and hiring people, is the terrible economy. It’s unclear where demand is going to come from as the economy deleverages.
Taxes are an issue, but a relatively minor one in comparison.