Today, the Ways and Means Committee, chaired by Rep. Kevin Brady (R-TX), held a hearing on how pro-growth tax reform will increase American competitiveness, spurring job creation, investment, and growth in the U.S.
As Chairman Brady said at the start of the hearing:
“We gather today because, with our current tax code, the playing field for American workers is not level. Not even close. Over three decades have passed since the last time we reformed America’s tax code. While Washington has been on the sidelines, our foreign competitors have been improving their tax systems for their businesses and workers. Today, it’s clear our tax code is failing American workers, families, and businesses.”
The Chairman outlined three failures of today’s broken tax code that drive American jobs overseas to countries with more competitive, pro-growth tax systems. Our tax code:
- Imposes the highest corporate tax rate in the industrialized world on American job creators;
- Discourages American businesses from bringing home their foreign earnings; and
- Favors foreign workers and businesses over American workers and business.
As business leaders from two very different sectors of the economy—retail and agriculture—as well as economic experts made clear today, delivering pro-growth tax reform this year is “vital” for bringing American jobs back to the U.S. and leveling the playing field for our workers. Specifically, witnesses discussed several pro-growth solutions, including:
Lowering Tax Rates for Businesses of All Sizes, Helping Job Creators Invest in Hiring Workers and Increasing Paychecks
Mr. Luciano said: “Today, competitors have a substantial tax advantage—even if we are a more efficient company. That means they can make investments and create jobs more cheaply in other countries than in the U.S. ADM routinely has an adjusted effective tax rate of approximately 30 percent, while our non-U.S. global competitors frequently enjoy effective tax rates that are at least 10 percentage points below us, and some with a tax rate below 20 percent.”
Lawrence Lindsey—the former Director of the National Economic Council for President George W. Bush—said: “Coupled with the fact that America has one of the highest corporate tax rates in the world, this double-whammy causes firms to consistently headquarter and shift production outside of the U.S. We lose both jobs and tax revenue as a result.”
Moving to a Modern, Territorial Tax System that Encourages America’s Global Businesses to Invest Foreign Profits in the U.S.
Mr. Luciano said: “U.S.-based companies face a high tax rate on worldwide income, while non-U.S. companies pay taxes at a lower rate and pay on income only in the countries in which it is earned. The higher rate on worldwide income inhibits our ability to compete effectively. The result is a competitive advantage for our non-U.S. competitors.”
Ending the “Made in America” Tax and Leveling the Playing Field for American Workers to Compete and Win around the World
Former Walmart U.S. CEO Bill Simon said: “If we get the pieces right, we will see a rebirth of American manufacturing, without severe negative impacts on important sectors like retail. We will see more good middle-class jobs, a robust US economy and an era of growth that will be led by a new industrial revolution.”
Dr. Lindsey said: “It would reduce the incentives to invest overseas and import rather than produce domestically and export.” He added, “in a sentence, [these ideas taken together], if enacted, would make America the best place in the world in which to invest and start a business.”
As Chairman Brady reinforced:
“It’s time for a tax code that rewards Americans’ hard work rather than pushing American jobs out of our communities … It’s time for Washington to get off the sidelines and back into the game—fighting for our businesses, workers, and consumers.”
CLICK HERE to learn more about today’s hearing.
CLICK HERE to learn more about our hearing last week on creating jobs, increasing paychecks, and growing the economy.