By Mark A. Weinberger, Global Chairman and CEO of EY and Chair of the Business Roundtable Tax and Fiscal Policy Committee
In his victory speech early Wednesday, President-elect Donald Trump set an ambitious goal for his administration and for the nation: doubling economic growth.
America’s business leaders fully support this goal and believe the United States can achieve it. A President Trump and the next Congress must quickly develop an economic policy agenda for 2017, and tax reform should be at the top of that list. Modernizing our anti-competitive tax system will enable increased business investment, result in consistent and reliable job creation, spark productivity and attract foreign capital to the U.S.
We can achieve this; it’s within our grasp. The failures of our outdated U.S. tax system are well known, and there’s widespread, bipartisan recognition of both the need to fix it and the benefits that would follow.
Indeed, candidate Trump — and the Republicans in the House of Representatives — both proposed tax plans that would go a long way towards establishing a more pro-growth and competitive tax system. Senator Schumer, who may become the next Democratic leader in the Senate, has also talked about the merits of international tax reform, coupled with infrastructure outlays.
The first problem of the U.S. tax system is that the United States has the highest top corporate tax rate of any country in the Organization for Economic Cooperation and Development (OECD) — about 39 percent when federal, state and local tax taxes are included. An OECD analysis identified the negative economic impact of high corporate tax rates: “Corporate income taxes are the most harmful for growth as they discourage the activities of firms that are most important for growth: investment in capital and productivity improvements.”
Employees across the country suffer as a result: Capital investment is what puts people to work, and increased productivity raise wages.