The need for reform and the opportunity to secure it have finally converged to result in a real opportunity to modernize America’s international tax system.
Last updated when John F. Kennedy was president, America’s international tax laws are badly antiquated. Created at a time when TVs were black and white and American companies did not face competition from every corner of the world, our tax laws have simply not kept pace with the dynamic global marketplace that has emerged.
The result: American companies and workers are paying the price for inaction and our economy’s potential for growth is being needlessly cut short.
Our out-of-step international tax system imposes a toll-like charge that effectively locks out approximately $1.7 trillion in private capital. That’s money that could be spent on research and development, new plants and equipment, and other job-creating activities.
Instead, American companies face the prospect of additional taxation when they want to invest foreign earnings here at home.
Eliminating this barrier to investment will help U.S. companies compete against foreign companies. And it is American workers who will win if our tax code allows the United States to be the most attractive place in the world to locate a business, invest, and hire.
The good news is that House Ways and Means Committee Chairman David Camp and others have put comprehensive tax reform on Washington’s to-do list. President Obama’s various non-partisan economic advisory panels have also recommended that the U.S. transition to a more competitive tax system. Furthermore, our major trading partners have already reformed their tax laws to ensure their own companies are not penalized for bringing foreign earnings home.
This confluence of events creates real opportunity for America’s economy and our workers.
The LIFT (Let’s Invest for Tomorrow) America Coalition believes we should seize this chance. We need balanced reform that unlocks the potential for investment and puts America on even footing with the rest of the world, while ensuring that America’s tax base is protected. This can all be achieved by adopting a modernized “territorial” tax system.
The need is obvious, our workers are ready to compete and win. Now it’s time for Congress and the administration to deliver on reform.
Claire Buchan Parker is the spokeswoman for the LIFT America Coalition.