Inside Tax Reform – Why Corporate Reform Should be Revenue Neutral
By ACT Staff
Corporate tax rates are falling around the globe. Hybrid international tax systems are becoming the global norm. The U.S. is among the last of the OECD countries to reform old tax rules that were developed early in the twentieth century before innovations in commerce, communication, and transportation created a truly global economy.
Comprehensive tax reform that cuts tax rates, ends tax breaks and preferences, and modernizes the international rules like most of the rest of the world would increase economic growth and improve American competitiveness. Businesses headquartered in the United States currently face the highest corporate statutory rate in the developed world as well as international tax rules that penalize reinvesting foreign profits in the United States. Corporate tax reform should be focused on lowering the rate and modernizing our antiquated international system – without adding to the deficit.
Revenues obtained from ending corporate tax breaks and preferences should be devoted to reducing the corporate rate. Similarly, revenues obtained from safeguarding the US tax base should be devoted to modernizing the international tax rules. The vibrant U.S. economic growth that will result from lowering the corporate rate and modernizing international rules cannot be achieved if the revenue necessary to fund those changes is diverted to other priorities.
U.S. companies already face a competitive disadvantage in competing in the global marketplace. Devoting revenue from base broadening to new spending or deficit reduction, while maintaining the developed world’s highest corporate tax rate and an early 20th century international tax regime, would exacerbate the competitive disadvantage for American companies, slowing job growth and economic opportunity.
Let’s support American jobs and economic growth. Congress should act on revenue neutral corporate tax reform now.