Parker: Keeping Our Economy and Meaningful Tax Changes on Track
“Tax Reform Splits Big Business . . . ” — Wall Street Journal
“Business Community Split on Corporate Tax Reform” — Roll Call
“Business Community Could Split on Tax Reform” — BNA
From reading these and other headlines, one theme that appears to be emerging out of Washington is that the business community has so many disparate interests that it may impede progress or ruin any chance of achieving meaningful corporate tax reform.
Given that the policymaking process has barely begun, the LIFT America Coalition believes it’s too soon to put the death watch on reform. The urgent need to update our tax code and the consequences of inaction are so great that we believe common ground can — and will — be found.
First, let’s look at where we can agree. There is bipartisan consensus that U.S. economic growth is too weak. All parties involved want the U.S. to be the best place in the world to do business. All parties want American workers to have opportunity. All parties want the United States to be competitive relative to our international trading partners.
So what can we do to achieve these goals?
One area that deserves specific focus is the need to modernize our international tax system, which was enacted more than 50 years ago. The world economy has changed dramatically since then: In 1962, 17 of the 20 largest companies in the world hailed from the United States; today, the number of U.S. companies on the top 20 list is just six. At the same time, the United States is now one of only six industrial countries in the world to cling to an outdated “worldwide” system of taxation.
Under this approach, U.S. companies engaged internationally pay taxes not only in the country in which they earn their profits, but they also pay a toll-like charge when they bring those profits home. As a result, they are essentially punished if they want to invest their overseas earnings back into the United States, and $1.7 trillion remains trapped overseas. Our competitors, who have transitioned to more modern international tax systems, face no toll charge and are thus free to invest in their home countries.
The combination of the changing global marketplace and our antiquated tax system puts U.S. companies and their workers at a terrible disadvantage. Congressman Dave Camp, R-Mich., and numerous advisory committees to President Barack Obama have recognized this problem and called for reforming our international tax laws to a more competitive territorial system.
Reforming our international tax system should include modern tax laws to provide a level playing field for American workers; permanent simplification of the tax code; a lower corporate tax rate to increase competitiveness vis-a-vis our competitors; and provisions to protect the U.S. tax base and prevent abuse.
The time for comprehensive tax reform has come. As the debate moves forward, we can’t afford to let headlines dictate our future; our leaders in Washington must continue to promote policies that will advance American competitiveness and help strengthen our economy.
Claire Buchan Parker is a spokeswoman for the LIFT America Coalition and former deputy White House press secretary and principal economic spokeswoman for President George W. Bush.