Why corporate tax reform will be hard, in one graph

By Ezra Klein

Binyamin Appelbaum, as an addendum to this sobering look at the realities of corporate tax reform, points to the work of NYU's Aswath Damodaran, who has compiled a rough estimate of the effective tax rates in various industries. You might already anticipate that the rates vary. But not that they vary this much:

You can see more of the data here (warning: Excel doc), if you'd like. But the basic takeaway is that there are plenty of industries that are benefiting from the current corporate tax code, and are likely to fight like hell to preserve the breaks they're currently getting. Moreover, as Appelbaum notes, a lot of these industries are the sympathetic ones: "High-tech industries pay relatively little in taxes. Utilities and other infrastructure providers pay some of the highest rates. ... Mr. Damodaran says much of the difference is a question of life cycle. Young industries tend to be plowing more of their revenues into research and equipment and other kinds of spending that the government rewards with tax breaks."

And that's really what corporate tax reform will be about. "Loopholes" sound like bad things. "Incentives to plow more revenues into research and development and equipment" don't. Nor do tax breaks to locate manufacturing in America. But that's the sort of stuff we'll have to get rid of to substantially lower the rates in a revenue-neutral way. And this conversation, remember, is going to happen inside a political system that can't even decide to tax the earnings of hedge-fund managers like income.