Last week, the House Ways and Means committee held another hearing to discuss the possibility of tax reform. The theme this time was the effect of global tax institutions and the effect they had on the U.S. economy and jobs. Like previous hearings, the general consensus was that the U.S. is falling behind in the global markets as more and more companies choose to leave the U.S. for other nations. The witnesses present had a few varying opinions, but there was an agreement on one thing- the corporate rate in America is killing jobs and forcing our companies to invert overseas.
The witnesses offered various options for building up businesses and stopping job loss; fighting European Union state-aid investigations, anti-Tax Stripping laws, territorial tax schemes, and lowering the corporate tax rate. Of those options, the tax rate should be the first priority. It’s the most direct and the most effective tool we have to combat the (effective) efforts of Ireland, England, Canada, and any other country with a corporate tax rate below our 35 percent.
This year, three major companies have left for better tax environments. This pattern has only been increasing in recent years, and it’s no accident why. While the United States has failed to lower its corporate tax rate, other nations have been purposefully lowering theirs in order to promote competition. Wednesday’s hearing heard the same thing over and over again- our corporate rate is too high to keep businesses here, and the first and easiest thing for us to do is lower the rate.
The hearing was held to address the number of tax factors that affect the U.S. Under the BEPS program, U.S. Taxpayers may be on the hook for retroactive taxes, $2 trillion of U.S. profits are stuck overseas, and our corporate tax rate is painfully higher than our foreign competitors. All these issues need to be addressed, but lowering the rate should be their priority. By lowering the rate, we can stop the flow of inversion, attract new business, and keep jobs here.