On April 1st the United States will have the highest corporate tax among developed economies after Japan reduced its rate. Today The Daily Caller ran an op-ed from NAM President and CEO Jay Timmons on how our nation’s high corporate tax rate is hurting the competitiveness of manufacturers.

American manufacturers are focused on investment, expansion and job creation.  One important way to do this is by expanding their customer base. And, with 95 percent percent of the world’s population outside the United States, it is not surprising that American companies are looking at markets outside the United States.  More business translates into more jobs and stronger companies.  So why is the Administration so intent on punishing companies that operate in the global market place?  A new video from the Tax Foundation explains in simple terms how overseas business benefits U.S. companies and their workers and how, in contrast, misguided U.S. tax policies make it much harder for them to compete.

Manufacturers have led the charge in recent years to lower corporate tax rates and many others have joined us in pointing out that the U.S. has the second highest corporate tax rate among developed countries.

Well, that could change soon. Japan—the only county that bests us in the corporate tax rate department—is thinking of joining a worldwide trend and lowering the country’s corporate tax rate. In fact, the Japanese government sees a lower corporate tax rate as key to the country’s industrial competitiveness.

So where would that leave us?  Out in front with a uncompetitive worldwide tax system and the highest tax rates in the world—and not a place where you’d want to headquarter your company, perform the bulk of your R&D and use as a manufacturing platform.

Anticipating proposals from a returning Congress and President Obama to pay for new spending initiatives (or “targeted” tax breaks) by raising taxes on energy production, the National Association of Manufacturers on Sept. 2 sent a letter to House and Senate leadership expressing the NAM’s opposition. The letter, signed by the NAM’s Keith McCoy, vice president for energy and resource policy, objects to the revisions to what’s known in Capitol argot as Sec. 199. Excerpt:

Sec. 199—enacted in 2004—is designed to reduce the tax burden on domestic manufacturers to help spur investment in the United States and create U.S. jobs. The U.S. statutory corporate tax rate currently is 35 percent, almost 10 percentage points higher than the average corporate tax rate for other countries in the Organization for Economic Cooperation and Development. The Sec. 199 provision helps mitigate this tax burden for all domestic manufacturers.

The NAM strongly opposes discriminatory tax policies, especially when they single out a particular type of business or industry sector for non-deductible treatment. Excluding the income from U.S. oil and natural gas production, refining and processing from the Sec. 199 tax benefit will discourage new oil and gas investments in the United States by making domestic energy investments less competitive economically with foreign opportunities. (continue reading…)

The Senate voted to invoke quorum on H.R. 2847, the Jobs for Main Street Act, on Monday by a vote of 62-30.

If the one-time tax credits for hiring accomplish anything it’s, uh, Jobs for Main Street!

Which is to say that a temporary, small credit for hiring an employee will hardly change an employer’s behavior, other than to perhaps prompt the filing of a form to qualify for the credit after the hiring of a worker who would have been hired in any case.

Congress should think about the big picture, beyond the 2010 elections. As the Tax Foundation concludes in a new special report, “The Importance of Tax Deferral and A Lower Corporate Tax Rate“:

Key Findings
• The United States is the only large economy that taxes corporate income worldwide with a tax rate exceeding 30 percent.
• During 2009, both Great Britain and Japan enacted territorial systems, giving their multinationals a major tax advantage over U.S.-based firms that are saddled with a worldwide system. Over 80 percent of developed nations now have territorial systems.
• Whether the U.S. moves to strengthen its worldwide system by repealing deferral or follows the international trend by adopting a territorial system, there will be unfortunate incentives created. In both cases, though, lowering our corporate tax rate will mitigate them.
• A reasonable upper-bound target might be a combined federal-state rate of roughly 25 percent, implying a federal corporate tax rate of roughly 20 percent.

These findings reinforce the NAM’s new economic analysis conducted by the Milken Institute, “Jobs for America,” which examined the U.S. corporate tax rate:

Reducing the U.S. corporate income tax rate to match the OECD average would trigger new growth. By 2019, it could boost real GDP by $375.5 billion (2.2 percent), create an additional 350,000 manufacturing jobs, and increase total employment by 2.13 million.

Two million jobs, eh? That’s a lot more than any temporary employment credit will ever achieve.

See also our NAM news release, “Manufacturers Disappointed with Senate Jobs Bill; Bill Doesn’t Go Far Enough to Create Jobs”