Sometimes the ranking of #1 is a dubious distinction… surely no one wants to be #1 on the “worst companies to work for” list, the “worst Super Bowl Commercial” list, the “worst movie of all time” list or the “worst dressed” list, but one year after Japan’s corporate tax rate cut went into effect, the U.S. continues to be home to the highest corporate tax rate in the world.
We live in a competitive world. Everyone, from executives, to states, to countries, wants to be able to compete for investment and jobs – and that is all the more true in the aftermath of the great recession. Yet, a year after reaching this “pinnacle” of worst tax policy, nothing has changed.
The NAM has long advocated for comprehensive pro-growth, pro-job tax reform that will result in a permanent competitive tax code that will allow the U.S. to compete with our peers around the world. As articulated in in the recently released Growth Agenda, “The United States needs a comprehensive plan for economic growth. A bipartisan commitment in Washington to pro-growth policies will make our nation a more competitive place to do business.” At the heart of this plan is an updated tax code and to improve our competitiveness, it is essential that the United States overhaul its tax system at the corporate and individual levels – something that has not been undertaken in nearly 30 years.
Manufacturers have applauded the stated commitment of the Chairmen of the Congressional tax writing committees – the House Committee on Ways & Means and the Senate Finance Committee – to undertaking comprehensive tax reform. We have high hopes that under the leadership of Chairman Dave Camp (R-MI) and Chairman Max Baucus (D-MT) respectively, the Committees will succeed in this effort this Congress. And we continue to weigh in with both committees as to what manufacturers believe must be included in any comprehensive tax reform plan to make it competitive for manufacturing which at the heart must include creating a national tax climate that enhances the global competitiveness of manufacturers in the United States and the avoidance of policy changes that would increase the tax burden on the manufacturing sector, discouraging job creation and investment.
Central to today’s anniversary, comprehensive tax reform must reduce the corporate tax rate to a level that will make the United States competitive with our major trading partners and recognize the significant reductions made by other competitor nations while also moving from our current worldwide tax system to a territorial tax system similar to systems in most industrial countries, structured to enhance U.S. competitiveness, not raise additional revenue.
We believe that comprehensive tax reform must change the tax treatment of smaller manufacturers which is important because nearly two-thirds of manufacturers are organized as “flow-throughs” and pay taxes at individual rates. Any tax reform effort that includes higher tax rates for these companies would negatively impact their ability to invest in their business and create and retain jobs. An updated code must also provide a strong, permanent and competitive research and development (R&D) incentive to help ensure that manufacturers in the United States continue as global leaders in technology and innovation and also must maintain a robust capital cost-recovery system to spur business investment and expansion.
As the old saying goes, where there is a will there is a way, and for the 12 million Americans who work in manufacturing we hope that the will is enough to get this completed before we reach another anniversary with this most dubious distinction.
Carolyn Lee is senior director of tax policy, National Association of Manufacturers.
In her role, Carolyn leads the Institute’s workforce efforts to close the skills gap and inspire all Americans to enter the U.S. manufacturing workforce, focusing on women, youth, and veterans. Carolyn steers the Institute’s initiatives and programs to educate the public on manufacturing careers, improve the quality of manufacturing education, engage, develop and retain key members of the workforce, and identify and document best practices. In addition, Carolyn drives the agenda for the Center for Manufacturing Research, which partners with leading consulting firms in the country. The Institute studies the critical issues facing manufacturing and then applies that research to develop and identify solutions that are implemented by companies, schools, governments, and organizations across the country.
Prior to joining the Institute, Carolyn was Senior Director of Tax Policy at the NAM beginning in 2011, where she was responsible for key portions of the NAM’s tax portfolio representing the manufacturing community on Capitol Hill and in the business community and working closely with the NAM membership. She served as the Director of Legislative and Government Affairs at the Telecommunications Industry Association, Manager of State and Federal Government Affairs for 3M Company, and in various positions on Capitol Hill including as Legislative Director for former U.S. Senator Olympia Snowe (R-ME), and as a senior legislative staff member for former U.S. Rep. Sue Kelly (R-NY).
Carolyn is a graduate of Gettysburg College in Gettysburg, Pennsylvania graduating with a B.A. in Political Science. She resides in Northern Virginia with her husband and three children.