As David Wessel points out, “By expressing interest in tax reform without offering specifics, Mr. Bush encouraged every tax geek with a plan for a better tax system to shout about its imminent enactment.” From Will Bush Look to 1992 for New Tax Code? :
Republicans and business allies long have objected to taxing profits once at the corporate level, and again when paid to shareholders as dividends. The Treasury’s 268-page report made few ripples when it came out in January 1992. It has been gathering dust on bookshelves like mine ever since.Which brings us to CBIT, known to its inventors as “see-bit.” In this approach, interest paid by corporations, dividends paid on shares of stock and capital gains from the sale of stock would be tax-free to individuals. Companies no longer would be able to deduct interest payments.
This would be a big deal. In 2002, the last year for which Internal Revenue Service data are available, corporations deducted $923.4 billion in interest. Without that, they would have paid $323 billion more taxes at the 35% corporate-tax rate. The 1992 Treasury plan would have used this money to finance an across-the-board cut in the corporate-tax rate. In Mr. Bush’s current search for “revenue neutral” tax reform — where he has to find a loser for every winner — the money might finance changes to either the corporate or the individual income tax.
The big selling point for CBIT was that it would both end the double taxation of corporate profits and get rid of tax-code provisions that encourage companies to finance investments with debt (issuing bonds) instead of equity (selling stock.) This, the Treasury argued at the time, would reduce the cost of capital to U.S. companies so they would invest more and invest more efficiently, and thus propel the U.S. economy faster.