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Improve U.S. tax competitiveness, reduce deficits

Oct 27, 2011
Carter Wood

Busy day Wednesday on taxes and deficits, with much to report as way of a roundup...

House Ways & Means Chairman Dave Camp (R-MI) released an "international tax reform discussion draft," which Business Roundtable welcomed for embracing key elements of a more globally competitive, growth- and investment-stimulating corporate tax structure -- lower corporate tax rates (25 percent) and a competitive territorial system. As BRT President John Engler said in the association's statement, "This proposal marks a significant advancement for corporate tax reform that has the potential to bring the U.S. tax system much closer in alignment to the tax systems of other developed countries."

The committee's website has the draft, a section-by-section analysis and more background here.

News coverage noted BRT's views:

Headline writers will perforce (and per choice) reduce "moving toward a competitive territorial system as predominates worldwide" to "business break." It's up to advocates to explain how important that change away from the outdated worldwide system is to U.S. economic growth. Ways & Means Committee Member Rep. Peter Roskam (R-IL) did a nice job with this statement aptly describing our current system: "Our current corporate tax system is outdated, overly complex, and serves as a significant barrier to job creation."

Wall Street Journal, Washington Wire blog, "Rep. Camp Unveils Business-Friendly Corporate Tax Plan," with John MacKinnon reporting:

Reactions from business groups tended to focus on the issues they care most about. For instance, the Business Roundtable and the National Foreign Trade Council – two groups that comprise major multinationals – were thrilled about the shift to a territorial system.

“Moving to a territorial tax system and reducing the corporate tax rate will allow companies to grow in the United States, and will also attract more in-bound investment, leading to more job growth, said Cathy Schultz, vice president of the NFTC.

Another coalition of mainly large domestic companies was more interested in the low rate. That group, called RATE, for Reducing America’s Taxes Equitably, includes major railroads as well as AT&T, Boeing, Capital One, CVS Caremark, FedEx, Intel, Lockheed Martin, Macy’s, National Retail Federation, Nike, Raytheon, Texas Instruments, Time Warner Cable, UPS, Verizon, Viacom and Walt Disney.

Still another group, the WIN America Coalition, which includes several high-tech businesses, was happy about a provision allowing companies to bring home existing foreign earnings at a reduced rate.

We'd characterize BRT as being in more of an "all of the above" state of mind, but MacKinnon has certainly hit on a real dynamic on the business side.

As for deficit reduction, BRT released a letter to the Joint Select Committee on Deficit Reduction encouraging members to keep on keeping on: "The United States must bring deficit spending and our national debt under control, and BRT members, chief executive officers of leading U.S. companies, believe a successful outcome to this process is critical for future economic growth, job creation and American global competitiveness." Coverage ...