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Eaton Corp. CEO: Modernize corporate taxation to compete globally

Jan 13, 2012
Carter Wood

The time has come for fundamental, responsible corporate tax reform to improve America's global competitiveness, Alexander M. "Sandy" Cutler, chairman and CEO of Eaton Corp., said on CNBC today.

Cutler, who is a member of Business Roundtable's executive committee, appeared on CNBC's Squawkbox and took questions from co-host Joe Kernan and guest host Sen. Rob Portman (R-OH). Based in Cleveland, Eaton Corp. is a diversified power management company with 2010 sales of $13.7 billion.

Asked by Kernan about “in-sourcing,” Cutler responded with a discussion of the broader issues of global competition. (video)

Cutler: The world has changed so much, Joe, if you go back to the 1950s, when the U.S. could export most products around the world. Today we find very capable economies around the world. They've developed. They have local competitors, you have to be right there to compete with them, so I think that look backwards is not practical anymore. And that's why so many of our trade policies and our tax policies need to be thought of with a forward look and not a look kind of gazing back into the 1950s.

Kernan: What would be most important to help Eaton right now, if you had a wish list? Give me three or four things.

Cutler: If we think about what’s changed: Take the U.S. corporate tax policy for example. Most of its important precepts go back to the 1980s, the mid '80s or before. And if you think what was going on: We didn't have the Euro at that time, the Internet was just beginning. International trade blossomed since then.  So I would urge that one of the things we might consider on the political level and doing this in a bipartisan way is fundamental, responsible corporate tax reform. And let's not wait for the next presidential election.

Kernan: Amen

Cutler: We have too high a domestic rate and we have a thoroughly uncompetitive international tax regime that is really reflected, or paralleled, by only about four of the 30 OECD countries so the vast majority of the world has moved to a far more competitive territorial tax system.

Cutler also talked about the impact of regulatory uncertainty in discouraging investment in the United States, and in response to a question from Sen. Portman, explained that when U.S. companies invest abroad, that also stimulates hiring in U.S. operations.