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Tax Reform, Not Tax Increases, for Economic Growth
Anyone who’s filed taxes knows to block out hours, and maybe even days, for the task. If you run a small business or corporation, you probably have to hire accountants and tax counsels to help. The forms and instructions are hard to follow. Once you get your tax filing right, the next concern is whether the tax rates are fair, whether they’re excessive or adequate to fund the fundamental functions of government, and if you have a business, whether the tax system helps or hurts your ability to create jobs.
The debt crisis and poor economy are giving new rise to a discussion in Washington of whether the tax system merits wholesale change and if so, what that change should look like.
Unfortunately, President Obama seems to embrace a definition of tax reform that has nothing to do with economic growth. The President hints that his interpretation might be a stalking horse for tax increases. This week, he said tax reform should “ask those who can afford it to pay their fair share.” He hasn’t put out any proposals that many of us who have studied the tax system would consider true tax reform. On the Finance Committee, with jurisdiction over tax policy, we’ve looked at tax reform as an opportunity to simplify tax filing for all taxpayers and to make U.S. businesses more competitive in a global economy.
For example, under the current system, a U.S.-based company could face a tax rate of 35 percent in the United States, while a competing company based in Asia might face a tax rate of only 15 percent. What level of taxation is appropriate for a U.S.-based company? How can a U.S.-based company become more competitive relative to global competitors? Should the corporate tax rate mirror individual tax rates? What level of tax revenue is appropriate to fund the federal government? These are all key questions to answer in the context of tax reform.
To register my concerns about the President’s definition of tax reform, I asked the President to refine his view of reform to constitute measures that will make U.S. companies more competitive worldwide than they are now and encourage job creation in the United States.
As I wrote, “Tax reform in a global economy is a serious task. There are complex issues to be considered. These include a comparison of the rates and incentives provided by the countries we are competing with for jobs. A serious task needs serious leadership. Demagoguery of tax incentives may provide good political sport but it does not provide the strong leadership needed for the serious task of reforming the tax code to secure America’s competitiveness in the global economy.”
With unemployment and growth rates where they are, the country cannot afford “tax reform” that would raise taxes and leave the economy in its anemic state of growth, or make it even worse. The President should use the bully pulpit of his office to build consensus on tax reform that will encourage investment and job creation now and going forward.
Friday, Aug. 12, 2011
Anyone who’s filed taxes knows to block out hours, and maybe even days, for the task. If you run a small business or corporation, you probably have to hire accountants and tax counsels to help. The forms and instructions are hard to follow. Once you get your tax filing right, the next concern is whether the tax rates are fair, whether they’re excessive or adequate to fund the fundamental functions of government, and if you have a business, whether the tax system helps or hurts your ability to create jobs.
The debt crisis and poor economy are giving new rise to a discussion in Washington of whether the tax system merits wholesale change and if so, what that change should look like.
Unfortunately, President Obama seems to embrace a definition of tax reform that has nothing to do with economic growth. The President hints that his interpretation might be a stalking horse for tax increases. This week, he said tax reform should “ask those who can afford it to pay their fair share.” He hasn’t put out any proposals that many of us who have studied the tax system would consider true tax reform. On the Finance Committee, with jurisdiction over tax policy, we’ve looked at tax reform as an opportunity to simplify tax filing for all taxpayers and to make U.S. businesses more competitive in a global economy.
For example, under the current system, a U.S.-based company could face a tax rate of 35 percent in the United States, while a competing company based in Asia might face a tax rate of only 15 percent. What level of taxation is appropriate for a U.S.-based company? How can a U.S.-based company become more competitive relative to global competitors? Should the corporate tax rate mirror individual tax rates? What level of tax revenue is appropriate to fund the federal government? These are all key questions to answer in the context of tax reform.
To register my concerns about the President’s definition of tax reform, I asked the President to refine his view of reform to constitute measures that will make U.S. companies more competitive worldwide than they are now and encourage job creation in the United States.
As I wrote, “Tax reform in a global economy is a serious task. There are complex issues to be considered. These include a comparison of the rates and incentives provided by the countries we are competing with for jobs. A serious task needs serious leadership. Demagoguery of tax incentives may provide good political sport but it does not provide the strong leadership needed for the serious task of reforming the tax code to secure America’s competitiveness in the global economy.”
With unemployment and growth rates where they are, the country cannot afford “tax reform” that would raise taxes and leave the economy in its anemic state of growth, or make it even worse. The President should use the bully pulpit of his office to build consensus on tax reform that will encourage investment and job creation now and going forward.
Friday, Aug. 12, 2011