TPA Submits Comments To Tax Reform Working Group

On Thursday April 11, 2013, the Taxpayers Protection Alliance submitted comments to the House Committee on Ways and Means Tax Reform Working Groups urging a lowering of the corporate tax rate. On April 1, 2013, the U.S. celebrated a somber anniversary, having the highest corporate tax rate amongst OECD nations.  Social welfare states have spent the last few decades actively cutting their corporate rate to boost their economies.  In fact, Sweden recently announced plans to cut its rate from 26.3% to 22%. If enacted, this rate would be a full 13 percentage points lower than that rate paid by U.S. companies. While some falsely claim that no U.S. businesses pay the corporate tax rate, our statutory rate is already having a negative impact on wages and the economy. According to a new study, U.S. GDP will be between 1.2 percent and 2.0 percent smaller in 2013 because of our 35% statutory tax rate. The tax rate also deters foreign countries from investing in the United States while at the same time encouraging U.S. companies to relocate.  From 2000 to 2011, the U.S. lost a net of 46 Fortune Global 500 company headquarters to other, lower-tax countries in Europe and Asia.  Tax reform is long overdue and this opportunity must not be wasted.

Read the full statement below:

Tax Reform Working Groups

April 11, 2013

The following comments are submitted on behalf of the Taxpayers Protection Alliance. TPA is a non-profit non-partisan organization dedicated to educating the public through the research, analysis and dissemination of information on the government’s effects on the economy. TPA, through its network of taxpayers will hold politicians accountable for the effects of their policies on the size, scope, efficiency and activity of government and offer real solutions to runaway deficits and debt. TPA believes that the current tax code – particularly our “world-leading” corporate tax rate of 35% – is a competitive disadvantage for our businesses and is negatively impacting U.S. workers and U.S. taxpayers.

The U.S. recently celebrated a somber anniversary on April 1. For one full year, following Japan lowering its corporate tax rate, the U.S. has stood alone with the highest rate amongst OECD nations. Social welfare states have spent the last few decades actively cutting their corporate rate to boost their economies. Most recently, Sweden announced plans to cut its rate from 26.3% to 22%. If enacted, this rate would be a full 13 percentage points lower than that rate paid by U.S. companies.

While some falsely claim that no U.S. businesses pay the corporate tax rate, our statutory rate is already having a negative impact on wages and the economy. According to a new study, U.S. GDP will be between 1.2 percent and 2.0 percent smaller in 2013 because of our 35% statutory tax rate. Additionally, workers will also suffer a depression in wage growth by between .1% and .3%. In the long run wages may be depressed by as much as 1.2% because of the statutory corporate rate.

The tax rate also deters foreign countries from investing in the United States while at the same time encouraging U.S. companies to relocate. From 2000 to 2011, the U.S. lost a net of 46 Fortune Global 500 company headquarters to other, lower-tax countries in Europe and Asia. The loss of these headquarters not only creates a loss of significant, often higher-paying jobs, it also dismantles what is often the centerpiece of a community.

We are encouraged by the work being done by the Ways & Means Committee and applaud discussions to reduce the U.S. corporate rate nearer the OECD average of 25%. We were also pleased to see that even President Obama has endorsed revenue-neutral corporate tax reform in his recent budget. However, we are disappointed by the attempts being made by some in the Administration and Congress to continue picking winners and losers – a problem that plagues the current tax code. Any reforms to the tax system should move the U.S. to a system that treats all taxpaying businesses the same.

Tax reform is a long overdue proposal and we must not waste this opportunity. However, during this process, we must not lose site of the main goal of reform which is to lower tax rates and reduce the burden of the tax code.

Sincerely,

David E. Williams, President