Need for tax reform is settled business; Time for Congress to act

Today’s Senate Finance Committee hearing, titled “Building a Competitive U.S. International Tax System,” could not come at a better time. Top economists, business leaders, and lawmakers on both sides of the political aisle agree: American workers deserve greater economic opportunity; American businesses need the ability to increase investments made here at home; and one of the biggest obstacles standing in the way is our outdated and broken international tax system.

In other words, the question is no longer if tax reform is needed, but how and when we can do it.

{mosads}As Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) hear expert testimony today, the answers defining the path forward for tax reform won’t necessarily surprise many, but let’s hope the urgency of the moment will spur lawmakers to act soon.

Simply put, our current international tax laws – designed for a world a half century ago –directly threaten our ability to compete in the 21st century.  Our nation continues to fall further behind with each day we stand still on reform.

First, with the highest tax rates in the industrialized world, our business tax policy is stifling growth. American workers need a growing, expanding economy—and the innovation and investment to make that happen will only occur if U.S. companies and workers can compete on a level playing field. 

Second, as one of the few major economies in the world that taxes domestic companies on overseas earnings, we’ve locked $2.1 trillion in private investment outside our borders. The status quo creates a disincentive for companies to bring that capital home and invest in American workers. With practical reforms, like those pursued by our trading partners, we can expand economic opportunity for our workers here at home.

The solutions are clear: Lower the rate, move to a modern international system, and let our workers reap the benefits. And what is also clear are the fallacies of reform that we should avoid.

Settling for one-time standalone measures may be appealing in the near term, but they do little to make America the world’s most attractive place to locate and build a business, protect the tax base, or ensure a competitive business environment for years to come. Only permanent solutions will truly stimulate the economy, encourage companies to invest overseas earnings in the U.S., and help grow our workforce.

After today’s meeting, the Senate Finance Committee will seek public comments that will inform their May report on international taxes.  This is important progress, but Congress needs to pass reforms into law. American workers can’t afford to wait. 

The onus is squarely on our political leaders in Washington to turn the debate around tax reform into a reality. The time to act is now.

Parker is spokeswoman for the LIFT America Coalition.