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January 23. 2015

Experts: Tax Reform Would Improve Economic Growth

By ACT Staff

In a divided Washington, it’s hard to find common ground. But economists and policymakers from across the political spectrum all agree: tax reform would enhance job creation, increase wages, and lead to higher, sustained economic growth.

Economists

“If the U.S. is to achieve even the average economic growth rate among developed countries, it will require boosting investment significantly above current levels. Tax reform can address these problems. First, corporate investment can be increased by reducing the statutory corporate tax rate, currently the highest in the developed world…Finally, moving to a territorial tax system like that of our major trading partners would allow U.S. multinational corporations to invest more at home and abroad.”

William McBride – Tax Foundation, September 23, 2013

“In recent decades, American workers have suffered one body blow after another: the decline in manufacturing, foreign competition, outsourcing, the Great Recession and smart machines that replace people everywhere you look…What can workers do to mitigate their plight? One useful step would be to lobby to eliminate the corporate income tax…I, like many economists, suspect that our corporate income tax is economically self-defeating — hurting workers, not capitalists, and collecting precious little revenue to boot.”

Laurence J. Kotlikoff – New York Times, January 5, 2014

“Near unanimity among economists is rare, but you would be hard-pressed to find one who does not believe that there are two important economic trends that need to be addressed to help the middle-class: wage stagnation and anemic business investment. The majority of American workers have endured more than a decade of stagnant or falling real wages. And despite five years of recovery, private sector investment continues to lag historical rates as a share of national output. We think that tax reform is ripe for political cooperation because it attacks both of these problems.”

Laura Tyson and Douglas Holtz-Eakin – The Hill, December 12, 2014

“Transition to a territorial system will lead U.S. MNCs to repatriate about $1 trillion … This additional repatriation will increase domestic consumption and investment. We estimate that the additional consumption and investment will lead to a one-time increase in U.S. GDP by at least $208 billion and create at least 1.46 million new U.S. jobs. Following the transition, we estimate that the treatment of foreign source earnings in the stylized territorial system will increase annual repatriations by about $114 billion, leading to an increase in U.S. GDP by at least $22 billion per year and to the creation of at least 154,000 new U.S. jobs per year.”

Berkeley Research Group – November 8, 2013

Policymakers

“Regardless of who is right about the future of U.S. growth—and personally I find myself in the middle although leaning toward the optimistic side of the debate—we can and should be seeking to do better. And business tax reform can play a role in helping us to do better.”

Jason Furman, Chairman, Council of Economic Advisers – New York University School of Law, September 22, 2014

“If we’re going to get our economy moving again, we need a tax code that will stop standing in the way. And, make no mistake, promoting job creation and economic growth is the first and most important step we need to take in order to address our nation’s most pressing problems.”

Sen. Orrin Hatch – Senate Floor, December 16, 2014

“For years, the calls for comprehensive tax reform have filled the air in Washington but produced little legislation. With the indisputable need for comprehensive tax reform clear to all, it is a reasonable question to ask Congress and the president — what are you waiting for? In just the past few weeks alone, we have witnessed the negative impact our bloated and outdated tax code has on economic growth, American competitiveness and families across the nation…Carefully designed tax reform has the potential to reduce the $1.2 trillion worth of tax preferences in the tax code as well as lower rates, improve simplicity, reduce economic distortions, increase international competitiveness, promote economic growth, maintain the current progressive tax structure and reduce the deficit.”

Former Sen. Judd Gregg and former Gov. Ed Rendell – The Hill, May 7, 2014

“Twenty-eight years after the most recent overhaul of the U.S. Tax Code, we are falling behind other countries that have evolved their tax policies to reflect the changing dynamics of the global economy and create an environment favorable to growth. The United States is stuck with an unsustainable corporate tax rate of 35 percent. Meanwhile, the average corporate tax rate across the developed world — the member nations of the Organization for Economic Cooperation and Development — has fallen to 25 percent. Comprehensive tax reform must address this gap, encourage leading companies to invest further in the United States and reduce the ability, as well as the incentive, to manipulate the system…As chairman of the Senate Finance Committee, I’m working to ensure our country is on the path to long-term growth and prosperity through tax reform.”

Sen. Ron Wyden – Politico, September 15, 2014