The NYT had a piece on efforts to reduce loopholes to ensure the government actually collects in taxes something close to the targeted rate. The piece likely left readers with the belief that it was not possible to establish such a system.

Actually, it is not hard. If the government required companies to turn over a percentage of its stock in the form of non-voting shares, which are treated exactly like voting shares in terms of dividends and buybacks, it would be impossible for companies to cheat the government unless it was also cheating its stockholders. This means that if the targeted tax rate is 25 percent, companies turn over an amount of shares equal to 25 percent of the total. If the company pays a $2 dividend to its other shares, it also pays a $2 dividend to the government. If it buys back 10 percent of its shares at $100 each, it also buys back 10 percent of the government's shares at $100 each.

Anyhow, we could construct this sort of share system to ensure the government gets its share of corporate profits, but it's probably too simple for policy types to understand.

 

Addendum

An important point that is often missed in this debate is that the tax avoidance industry is both an enormous waste and an important source of inequality. The resources spent on avoiding taxes, in the form of lawyers, accountants, and corporate engineering, are a complete waste from an economic standpoint. Also, running tax avoidance scams allows some people to get very rich. The private equity industry is to a large extent a tax avoidance scam. It has produced some of the very richest people in the country. For this reason, a reform to the tax code that substantially reduced the opportunities for gaming would be a big gain from a progressive perspective even if led to a small loss of tax revenue from the corporate sector.