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President’s Budget Calls for Tax Reform but Fails to Achieve Goal

Washington – Business Roundtable (BRT) President John Engler lauded President Obama’s call today for “immediate action” to reduce corporate tax rates and simplify the tax code as critical to strengthening the economy and job creation.

However, Engler said, the budget fails to specify proposals to accomplish that important goal, while the budget’s other tax provisions go in the opposite direction.

By proposing to raise taxes on U.S. businesses with worldwide operations, the President’s Fiscal Year 2013 budget would make it difficult for these companies to compete.

“The budget proposals would add complexity and uncertainty when what’s needed is comprehensive reform of our tax system.” Engler said. “Changes to the way we tax foreign-earned income should be considered only in the context of comprehensive tax reform.”

These “recycled” proposals, which have repeatedly failed in Congress, would move the United States further out of step with the rest of the world, damaging U.S. competitiveness, Engler continued.

Business Roundtable supports a modernized, streamlined and fiscally responsible tax system that lowers rates and transitions to the kind of competitive territorial system common to other developed economies in the Organization for Economic Cooperation and Development (OECD).

The United States will have the highest corporate tax rate among OECD countries effective April 1, when Japan lowers its top rate, Engler noted.

BRT called on the President and Congress to overcome political differences to enact a multiyear growth and deficit-reduction plan to restore long-term stability to the U.S. economy. Such plan must include comprehensive corporate tax reform.

“The rest of the world knows we’re having an election in November, but they’re not taking the year off because we’re having an election,” Engler said. “They’re continuing to improve their competitive posture.  We cannot afford to use election-year politics as an excuse for inaction.”

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