While many press stories today focused on what U.S. Treasury Secretary Lew said – and did not say – on business tax reform and the so-called “inversions” this morning at the Urban institute, the media missed the boat by not focusing more attention on a panel discussion after Secretary’s Lew speech .
Indeed, John Samuels, Vice President and Senior Counsel of Tax Policy and Planning at the General Electric Company, raised perhaps the most important and most often missed point in this whole discussion when he asked why policy makers are discussing how to raise the bar and make it harder for companies to leave the United States when they should be focusing on what we need to do to make it more attractive for companies (aka employers) to be located in the United States.
This is exactly the question that manufacturers have been asking themselves for quite some time. One of the NAM’s top goals is to make the United States the best place in the world to manufacture and attract foreign direct investment—a goal on which almost everyone should be able to agree but one that policymakers have done so little to advance. We have known that our tax code was antiquated, non-competitive and perhaps worst of all, unpredictable, for decades. Our tax system is out of sync with the rest of the industrialized world and, as Mr. Samuels pointed out, other nations have been competing to attract additional business investment knowing that such investment will help improve their own economies.
Meanwhile, the United States continues to lag behind and the situation would only get worse with some of the proposals being discussed that would penalize companies looking abroad to expand their business. So to paraphrase Mr. Samuels’ question this morning, why are we focused on how to build higher walls and instead figure out better incentives to drive the investment that everyone agrees is needed to get our economy back up to speed and competitive into the future. The only sure way to do this is to undertake a serious effort to enact comprehensive tax reform. To accomplish this goal everyone is going to need to keep their eye on the prize.