On taxes, urgency AND permanency
A recurring theme during last week's release of Business Roundtable's release of "Taking Action for America: A CEO Plan for Jobs and Economic Growth," was the lack of predictability in U.S. tax policy. When it comes to taxes, business needs permanence.
At the news conference announcing the report (video) and in subsequent media interviews, BRT President John Engler noted that 101 tax provisions were expiring entering 2012. (More specifically, 60 provisions experired at the end of 2011 and 41 provisions will expire in 2012, absent action by Congress and the President.)
In contrast, in 1999 the comparable count was just 12 provisions.
Who can plan business or personal investment decisions when you have no idea what the tax code will look like on Jan. 1, 2013?
According to an analysis done by PwC based on Congressional Budget Office projections, if these provisions do expire, revenues under the CBO baseline would increase from 15.4 percent of GDP in 2011 to 21.0 percent in 2022. If they are all extended, revenues would rise to 18.3 percent of GDP, just slightly higher than the 17.9 percent average over the last 40 years.
You can understand how some elected officials, special interests and deficit hawks might like the expirations because of the additional revenue, but incontinent tax policy hardly makes for a pro-growth environment -- the economic growth that's essential to address the deficits.
For more detail on Business Roundtable's recommendations modernize and streamline the U.S. corporate tax system, see the "Competitive Taxation" section in the "Taking Action for America" report.
Grover Norquist of Americans for Tax Reform has also written at length in Human Events on the expiring tax provisions, focusing more on individual and small business taxation than corporate taxation. From "The taxman cometh":
When it comes to taxes, Washington, D.C., is now experiencing the quiet before the storm of the century. But, starting in early2013, American families and small employers will face a list of tax increases so large that they cannot be ignored in this election season. Adding together data from the non-partisan Congressional Budget Office (CBO), it’s reasonable to say that these combined tax hikes will total $6 trillion to $7 trillion over the next decade.
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In 2016, Business Roundtable will focus its efforts on greater job expansion and economic growth – national priorities that are inextricably linked. Informing our plan is our collective business experience as CEOs of America’s leading companies, experience that tells us what it takes to build momentum for the United States in in 2016 and beyond.