Eliminating this second layer of U.S. taxes will provide the necessary incentive for American corporations to return some of the estimated $1.6 trillion in profits that remain outside the United States because of high taxes. This incentive to return profits to the states is not a fiction — it is the considered opinion of the Bipartisan Policy Center’s Debt Reduction Task Force.
Chaired by Republican former Senate Budget Committee Chairman Pete Domenici and former Democratic White House Budget Director Alice Rivlin, the task force recommends lowering the tax rate for corporations to 28 percent. We believe a further reduction to 25 percent, while eliminating a variety of existing corporate tax credits to offset the deeper reductions in the overall rate, would provide an ever-bigger economic boost.
No country can tax its way to prosperity. Congress can, however, create a path to prosperity by taking measures to broaden the tax base by reducing the number of jobless and under-employed Americans and growing the number of citizens who pay taxes on earned income by way of returning capital back to America. One of the best and most widely used tools for doing so is the reduction of the corporate tax rate. It’s a cure Congress should look hard at enacting.
Walter Galvin retired as vice chairman of Emerson Electric Co. this month. The Missouri-based Fortune 500 global technology company has more than 130,000 employees and had more than $24 billion in operating revenue in 2011.