Roundtable chief: US getting beat 'all over the world' on tax rate

ADVERTISEMENT
The Roundtable is running ads in Washington publications this week that say the United States “will have the highest corporate tax rate in the developed world” as of April 1.

The business group is also sending lobbyists and member companies to Capitol Hill to discuss the issue, and is planning meetings in congressional districts with lawmakers and business leaders during the upcoming recess to talk up corporate tax reform. 

“We are getting beat on all over the world so we need to keep the profile of the issue up so it’s understood,” Engler said.

Engler said 60 provisions of the tax code expired at the end of 2011, and 41 more are set to expire at the end of this year. That lingering uncertainty with the tax extenders popular among business is helping to lead for a greater push by companies for corporate tax reform.

“How much are tax breaks worth if they are expiring all the time? How do you depend on those? How did you build a business model around something that for the next 18 months, this is what is going to be the case? You can’t even get a plant built in that time,” said the former Republican Michigan governor. “I think there’s a willingness to be very creative and to be very courageous on this, but the key is the rate has to go low enough to justify it.”

Last month, the White House submitted a framework for corporate tax reform, which Engler called “a helpful contribution to this whole debate.” But that plan would lower the corporate tax rate from 35 percent to 28 percent.

“We don’t think that goes low enough,” Engler said. The Roundtable has been lobbying for a 25 percent corporate tax rate as well as a “territorial” tax system where companies are taxed only on their profits made within the United States, not overseas. Most major industrial countries have moved to a territorial system.

Engler lamented the crisis mode that seems to pervade Washington where it seems impossible for lawmakers to move on major legislation — the latest being the failed reauthorization of the U.S. Export-Import Bank in the Senate this week.

The business leader said job growth is “limping” along, and predicted the unemployment rate would remain above 8 percent this coming October, the month before the election. 

“I have a hard time believing it’s below 8 percent because I don’t see much that is in the pipeline that gets us there,” Engler said. “I would like it to be. I would like it to be 5 percent but it’s not going to be. It isn’t going to be 7 percent. I think we are kind of limping along right about where we are.”

Engler also praised the Republican budget plan from House Budget Committee Chairman Paul Ryan (R-Wis.), calling it "courageous."

"I think there's some intriguing ideas on taxes that are in the budget. I think the budget itself is a wonderful and, I think you could argue, a courageous exercise because it's already catching a lot of incoming fire," Engler said. 

But the business group leader said Ryan needs a negotiating partner in the budget debate. 

"One of the problems of the broken legislative process is, who is Ryan negotiating with? What's the other approach? Who's got it? Who's going to bring it forward? Is there an obligation on the part of the Senate?" Engler said.

— This story was updated at 12:43 p.m.