According to the model in this proposal, corporations report their "true" profits to shareholders, and artificial "profits" to tax authorities using corporat

According to the model in this proposal, corporations report their "true" profits to shareholders, and artificial "profits" to tax authorities using corporate accounting tricks (i.e. https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement) to lower tax liability. This proposal assumes that, when the tax rate is based on the value of reported shareholder profits, corporations will continue to report their "true" profits to shareholders, rather than just reporting the values returned by corporate accounting tricks to shareholders. I doubt that would be the case. The best argument for it I've seen is "Presumably they want the stock to go up so they will report a profit", i.e. investors will move to companies that are on paper more profitable. But actually, investors do their research and can update their profit models of companies; a higher reported profit number will be seen as (and will actually be) a liability to the company. Companies that forgo accounting tricks will be seen as forgoing potential profit by paying taxes that they don't need to. (The same is true today; if Google announced today that they were voluntarily giving up tax accounting tricks and paying full rate, their share prices would go down.) The one caveat is whether the SEC enforces that the reported profits really are the true profits. But that model of enforcement (self reporting, cheaters rarely get caught and if they do settle the cases for amounts less than their profits) is silly. If we want taxes paid on true profits, we should implement tax law that precisely defines what those are and instruct the IRS to determine those exactly and send them a bill. Reporting requirements to the IRS should be set up with incentive structures that make cheating unprofitable or impossible.