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May 09. 2014

Calls for Tax Reform Continue to Mount

By ACT Staff

On the heels of last week’s calls for tax reform, opinion leaders and editorial boards across the country have continued to urge Washington to reform our outdated, anticompetitive tax code.

Washington Post Editorial Board: “What’s needed is a system for a world in which other countries have slashed their rates below U.S. levels…It’s an urgent issue, because U.S. firms hold $2 trillion in cash abroad rather than in the United States, where it could be invested…Perhaps Pfizer’s proposed deal will be the wake-up call Washington needs to push for bipartisan tax reform, if not before the November election, then after it — and certainly, one hopes, before the end of the 21st century.” [Washington Post, 5/7/14]

Former Sen. Judd Gregg (R-N.H.) and former Gov. Ed Rendell (D-Pa.): “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 In just the past few weeks alone, we have witnessed the negative impact our bloated and outdated tax code has on economic growth, American competitiveness and families across the nation…Under current law, U.S. companies are subject to a 35 percent tax on their U.S. profits, the highest corporate tax rate in the developing world… 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.” [The Hill, 5/7/14]

James Freeman, Assistant Editor, Wall Street Journal editorial page: “It’s not easy to find a country with a higher corporate tax rate than America’s 40%. And what’s remarkable is the number of truly oppressive governments that somehow manage to maintain a more competitive tax policy than the U.S….there are plenty of places in the world where one can enjoy both the rule of law and a competitive tax system. Why shouldn’t the U.S. be one of them?” [Wall Street Journal, 5/7/14]

Bill Bischoff, Columnist: “When you add in state and local taxes, the U.S. corporate tax rate is about 39%. That is at the extreme high end of the global scale. The average rate for OECD countries is only about 25.5%…Our too-high tax rate encourages companies to move operations overseas to places with lower taxes. When operations go overseas, the related jobs go with them. That’s the last thing we need if we’re serious about creating jobs in this country.” [MarketWatch, 5/7/14]

Robert C. Pozen, Senior Fellow at the Brookings Institution: “[M]ore than $2 trillion in foreign profits held by multinationals are “locked out” of the U.S. These funds could otherwise be spent making critical investments in the U.S. economy, such as building manufacturing facilities, buying U.S. companies or even pay dividends to shareholders. For instance, Apple recently borrowed $17 billion to pay dividends, despite holding more than $130 billion abroad…Thus, the current tax rules reduce investments in the American economy and distort business decisions of American executives.  Moreover, although the U.S. corporate tax rate is almost the highest in the world, the U.S. Treasury receives relatively little revenue from taxes on foreign profits from multinationals.” [Brookings Institution, 5/5/14]