In today's Wall Street Journal (subscription) BRT President John Engler writes on, "Corporate Taxes, the Myths and Facts":
America's corporate tax rate is too high and needs to come down. Who says so? President Barack Obama and Gov. Mitt Romney—and America's jobs creators who believe lower rates are a necessity for economic growth. At last week's presidential debate, the two candidates agreed on the need to reduce the U.S. corporate tax rate, now the highest in the world and a full 14 percentage points above the average rate among major advanced economies.
What the candidates didn't agree on was whether there is a deduction in the U.S. tax code that encourages companies to move plants overseas. Mr. Obama contended that such a deduction exists. Mr. Romney said, "I've been in business for 25 years and I don't know what you're talking about."
According to the nonpartisan congressional Joint Committee on Taxation, there are no specific tax credits or deductions for moving plants and jobs overseas. While the tax code provides a deduction for all business expenses, including plant-closing costs, severance pay and worker retraining, the simple fact is that businesses don't make relocation decisions on the basis of a tax deduction.
Engler then discusses how the U.S. system of international taxation is nearly 100 years old and fails to keep up with the realities of today's global economy. This "worldwide taxation" discourages U.S. companies from returning overseas earnings to the United States. If domestic economic growth is the goal, the United States should transition to a "territorial" system of international taxation, the kind used by our major competitors. By encouraging companies to return earnings to the United States, this system would boost investment, hiring and growth here, he argues.
And here's what the bipartisan President's Jobs Council had to say about territorial taxation in its report to President Obama in July:
A Territorial System of Corporate Taxation: Many Council members agree that the U.S. should shift to a territorial system of taxation in order to make America more competitive in global markets. While most other developed nations have adopted territorial systems that exempt most or all foreign income from taxes when they are repatriated, the U.S. subjects all worldwide earnings to the corporate income tax when they are brought home to the U.S. This approach actually encourages U.S. companies to keep their earnings abroad rather than investing them here at home. Adopting a territorial tax system would bring us in line with our trading partners and would eliminate the so-called “lock-out” effect in the current worldwide system of taxation that discourages repatriation and investment of the foreign earnings of American companies in the U.S.
Motion to proceed to consideration of S. 744, #immigration bill, passes Senate by 84-15. Getting right into amendments.
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