Transparency in our corporate tax system

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First, all businesses – large and small – should contribute responsibly toward the costs of government and the well-being of the economy. The average effective tax rate actually paid by U.S. corporations is half the statutory rate and is low by international standards. The corporate tax share of federal government receipts has dropped from 32 percent in 1952 to 8 percent now. Corporate income taxes amount to just 1.3 percent of GDP. Our nation cannot afford “revenue neutral” corporate tax reform that leaves corporate taxes as a share of our economy at historically low levels. The Tax Reform Act of 1986 lowered the statutory corporate tax rate but closed so many loopholes it actually increased corporate tax revenues. With large government deficits, deep budget cutbacks and deteriorating infrastructure, corporate tax reform must again be revenue positive today.




Second, businesses should not be rewarded for shifting jobs and investment overseas or disguising U.S. profits as foreign profits to reduce their taxes. In our current two-tier corporate tax system, some profitable U.S. corporations pay taxes while others pay little or none – using aggressive accounting manipulation to disguise U.S. profits as foreign profits to avoid taxes. Our government should reject demands by U.S. multinationals for a tax holiday to “repatriate” the funds they shifted offshore to avoid paying taxes. This would cost the U.S. Treasury $80 billion according to the congressional Joint Committee on Taxation and increase pressure to cut government spending on vital services. We also oppose changing to a “territorial” tax system, which would accelerate the use of accounting manipulation to shift domestic profits to foreign tax havens, permanently rewarding those who shirk their taxpaying responsibilities. 



Third, by ending unproductive tax loopholes and subsidies benefiting large corporations, we can level the playing field and raise revenues needed to restore economic vitality. Corporate taxes, like individual income taxes, support the public services and infrastructure upon which all businesses depend. These include a publicly educated workforce, transportation systems, safe drinking water and sanitation, the judicial system, taxpayer-funded research (which has played a crucial role in health advances and the creation of the Internet, for example), federal emergency response and so on. But, the public services and infrastructure underpinning a healthy economy are now being cut dramatically because of inadequate revenues.



A transparent corporate tax system that assures all companies pay for the services upon which our businesses, our customers, our workforce and our communities depend, would help restore the economic vitality and domestic job creation we all seek. 



David Levine
CEO, American Sustainable Business Council
 
Holly Sklar
Executive Director
Business for Shared Prosperity
 
Sam Blair
Network Director
Main Street Alliance