Editorial Boards, Economic Experts Call for Renewed Tax Reform Effort
By ACT Staff
As the deficiencies of the U.S. tax code continue to make headlines, a growing chorus has emerged to call on U.S. lawmakers to reform our outdated, anti-competitive tax system. Pundits, economists and editorial boards agree: our tax code is broken and must be reformed so that American businesses can compete effectively in the global economy.
USA Today Editorial Board: "America has long maintained an advantage by dint of its low taxes, light regulation and entrepreneurial culture. But it is losing those advantages for a variety of reasons, among them‚ a punitive and convoluted corporate tax system. The U.S. corporate rate of 35%, with an average of 4.1% added by states, is the highest in the world. Even with its many loopholes, it is higher than most others. Given how aggressively Europe has slashed its rates, a good case can be made for substantial cuts here as well. This would keep companies at home, and encourage them to bring their money home and put it to good use. [And] it would also help middle-class Americans, particularly those saving for retirement." [USA Today, 5/2/14]
IRS Commissioner John Koskinen: "'We've done probably all that we can in the statute to try to make it clear, to try to limit the inversions as much as possible, but ultimately if people meet the criteria, they can do it,' Koskinen told reporters after a Senate hearing. "The criteria has been constrained as much as possible. But, again, while we are all concerned about that, it probably feeds back into the need for tax reform." [Politico, 5/1/14]
Denver Post Editorial Board: "It's not just the 35 percent U.S. corporate tax rate that is a problem, but the double taxation that occurs. U.S. companies operating abroad are taxed in the country where the money was made. Then they are taxed at the difference between that rate and the U.S. rate, if it's higher (as it usually is) and they want to bring the money home. As a result, an estimated $2 trillion remains parked overseas. That is money that could be invested stateside, creating jobs and fueling prosperity. The U.S. needs to move toward ending this double taxation, lower the corporate tax rate and trim loopholes so tax reform remains revenue neutral." [Denver Post, 4/30/14]
James Carter, former deputy assistant secretary of the U.S. Treasury Department: "[Economic distortion] could be remedied by reforming our tax code with a modern, competitive hybrid system, where profits earned abroad can be returned to the US without the harsh tax levy currently in place. Reducing America's tax rate to one that is more consistent with the international community 25% or lower is the most commonly cited figure would also go a long way toward increasing investment in the United States." [Forbes, 4/30/14]
Jack Welch, former General Electric chairman and CEO: "The U.S. does not have a tax policy that makes sense, former General Electric chairman and CEO Jack Welch told CNBC on Tuesday. Losing American corporations to overseas countries with lower corporate taxes would be a sin, he added...'We are giving away money ... because we don't have a rational tax policy,' he said." [CNBC, 4/29/14]
Aswath Damodaran, professor at NYU's Stern School of Business: "The U.S. tax code is a mess, creating perverse incentives for companies to borrow more than they should, invest less than they would like to and accumulate more cash than they need. If you are puzzled (or indignant) about why a company (Apple) with $150 billion in cash-in-hand would borrow $17 billion or what motivates a large US company (Pfizer) to try to acquire a UK-based company (Astra Zeneca) and then move its headquarters to London, you should blame those who write the tax laws, and not the companies in question." [CNBC, 4/29/14]
Wall Street Journal Editorial Board: "We call the U.S. business tax rate 'among' the world's highest because, outside of places like North Korea that don't allow private business, it's nearly impossible to find a more punitive rate than the 40% inflicted in the U.S. The U.S., almost alone among the world's governments, demands to be paid on a company's world-wide profits whenever those profits are brought back to the U.S Shareholders and the U.S. economy are paying a heavy price under the current U.S. code the goal of U.S. tax policy should be to encourage companies to invest in America, not everywhere else." [Wall Street Journal, 4/29/14]
Office of Sen. Ron Wyden (D-Ore.): "The Pfizer proposal triggered concern in Washington. 'This further demonstrates the urgency for tax reform,' said a spokeswoman for Democratic Senator Ron Wyden, chairman of the tax-writing U.S. Senate Finance Committee...'Now is the time to undertake comprehensive reform to ensure our country stays competitive on a global stage and continues to be the best place for corporate investment,' the spokeswoman said." [Reuters, 4/28/14]
Rep. Dave Camp (R-Mich.): "It is a real problem when the tax code provides an incentive for U.S.-based companies to move overseas, often times taking good jobs with them" [New York Times, 4/28/14]
Austan Goolsbee, former Chairman of the Council of Economic Advisers: Appearing on CNBC, Goolsbee blasted "our complicated and deeply messed-up corporate tax system" because it encourages companies to reincorporate overseas. Our tax code is so outdated, Goolsbee said, that "it's a motivator just itself to have transactions even if they didn't make economic sense." Our corporate tax system "gives an incentive for foreign purchases of U.S. companies" so they can then "flip where the headquarters is." [CNBC, 4/25/14]
David Walker, the former U.S. Comptroller General under Presidents Clinton and Bush: Walker said there is "absolutely no question" that the U.S. tax code is "overly complex" and "not competitive." Walker argued that the U.S. urgently needs comprehensive tax reform that will "broaden the base, lower the rate, [and] go towards territorial taxation." [CNBC, 4/25/14]
