Recognition: World's highest corporate tax rate hurts U.S. economy
Business Roundtable recently launched "The March Toward Madness" campaign to highlight the sad fact that, as of April 1, the United States has the world's highest statutory corporate tax rate, a blow to the nation's ability to compete in the global economy. It's no joke, and the news media and political leaders are paying attention.
This week, via a mock 1986-vintage website, BRT makes the point that the U.S. tax system has not undergone a major modernization since 1986. (BRT news release) In the meantime, country after country -- including U.S.'s major competitors -- have lowered their corporate tax rates and made other major changes to make themselves more competitive. On April 1, Japan lowered its tax rate, giving the United States the unenviable status as the country with the highest corporate tax.
Columnist Paul Bedard at The Washington Examiner took note of our campaign in a recent "Washington Secrets" entry. From "We’re No. 1: In highest corporate taxes":
The Business Roundtable has been pushing for a clean cut in corporate tax rates, claiming it would spur job growth and industrial reinvestment. They even cite a recent move by England to cut their tax rates from 28 percent to 22 percent, which officials called “an advertisement for investment and jobs in Britain.”
Tita Freeman of the Business Roundtable told Secrets, “Comprehensive tax reform is an imperative for the U.S. if we are going to remain a leader in the worldwide economy.”
US News' Joseph Mason also cites the BRT in his "Economic Intelligence" column, "World's Highest Corporate Tax Rate Hurts U.S. Economically":
Operating under a higher tax rate automatically puts U.S. based firms at a competitive disadvantage to their foreign counterparts. Developments in technology and greater global integration have opened international boundaries. Companies today have fewer deterrents from relocating their operations to areas that provide the most economically conducive environment, putting an inestimable pressure on nations to create commerce-friendly conditions. We've already seen this at a state by state level.
Mason also addressed the second major disadvantage to U.S. corporate tax taxation, its use of a worldwide system, which discourages companies from bringing overseas profits into the United States, where they could be invested or contribute to stockholder dividends.
BRT President John Engler discussed both tax issues -- corporate tax rates and the lack of a territorial system -- with Larry Kudlow on Kudlow's weekend radio program, available via podcast. The interview starts at the 50 minute mark.
Elected officials also highlighted the U.S.'s new status as No. 1 in high corporate taxes. Rep. Dave Camp (R-MI), chairman of the House Ways and Means Committee, issued a statement. Excerpt:
While the April 1 date may suggest otherwise, this is no joke or laughing matter for American employers and workers. As of Sunday, America will have the highest corporate tax rate in the industrialized world, making the United States a less attractive place to invest and create jobs. Given the continued weakness in our economy, now is the time to enact comprehensive tax reform that lowers our tax rates for all businesses.
Sen. Orrin Hatch (R-UT) also weighed in on March 30, saying:
This isn’t an April Fool’s Day joke; as of April 1, the United States of America will have reached the inauspicious position of having the highest corporate tax rate in the developed world. Every industrialized country around the globe understands that tax rates can determine whether or not businesses succeed or fail. And America’s job creators know that to remain competitive abroad and create jobs here at home, we’ll have to radically reform our nation’s tax code, transition to a territorial tax system, and reduce our corporate tax rate to 25 percent. America’s high corporate tax rate is a drain on economic growth, efficiency, job creation, and competitiveness. I want America to be number one in many things, but having the highest corporate tax rate is definitely not one of them. If we are serious about stopping so-called ‘outsourcing,’ we absolutely must start overhauling our tax system that is a drain on economic growth and efficiency.
The Republican Policy Committee, chaired by Sen. John Barrasso (R-WY), offered facts and charts in its piece, "April 1st is No Joke for U.S. Workers."
UPDATE (9:30 a.m. Tuesday)
Kent Hoover, Washington Business Journal, "U.S. now has highest corporate tax rate in developed world":
The U.S. now has the highest corporate tax rate in the developed world.
This dubious honor was bestowed on us Sunday, when Japan lowered its corporate tax rate. To mark this occasion, the Business Roundtable revamped its web site on April Fool’s Day, turning back the clock to 1986. That’s the last time the U.S. reformed its corporate tax code. The web site’s a fun read, if you miss the days when Ronald Reagan was president and pagers were cutting-edge technology.