By Rep. Patrick Tiberi (R-Ohio) - 03/16/10 10:00 PM EDT
The president has also talked passionately about taking action to prevent U.S. jobs from going overseas. You can imagine my surprise upon learning that an American manufacturing company that has been supplying U.S. embassies around the world with stemware since the 1940s was recently passed over in favor of a company based in Sweden, the apparent victim of a no-bid award by the U.S. State Department. Again, there seems to be a vast difference between rhetoric and reality.
According to the Organization for Economic Cooperation and Development, the corporate tax rate in the United States is already one of the highest in the developed world, second only to Japan. While many countries are lowering their corporate tax rates, some are suggesting that we need to increase ours. The U.S. is also hanging on to a system in which foreign subsidiaries of U.S. companies pay taxes to foreign countries on their earnings.
In addition, U.S. companies also pay taxes on those same earnings if they are repatriated. Virtually every other country in the world has abandoned this system, opting instead to only tax profits earned in their respective countries. Industrialized countries around the world are moving in a new direction and we’re dangerously close to being left behind.
If U.S. businesses are to remain competitive, creating U.S. jobs as they prosper, we can’t rely on old assumptions. The United States is an important market, but it’s not the only market. Ninety-five percent of the world’s consumers live outside of the United States. Access to these consumers is key to the success of American companies operating around the globe. What too often gets lost in the rhetoric is that these customers support jobs in the U.S. Every day, thousands of American employees across the country report to work to support the international operations of their company.
Unfortunately, these jobs don’t need to be here — they can very easily be where the majority of the customers are. And if our tax policy isn’t competitive with the rest of the world, providing employers a level playing field with their rivals headquartered outside of the U.S., more and more of them may very well be.
In response to last year’s “International Tax Policy Reform” proposals, leaders of hundreds of American companies that provide millions of good-paying jobs in the United States, their employees and lawmakers from both sides of the aisle spoke up. This response seems to have had an impact. More and more people are educating themselves about the importance of these issues to the future of our country. Unfortunately, the proposals in this year’s budget would still increase taxes on American companies doing business overseas by $122 billion. There’s obviously still work to be done.
In the months ahead, we’re likely to hear that tax increases are needed to fund important government programs. Unfortunately, we’re also likely to hear the familiar refrain that U.S. companies are “cheating” the system and need to pay more.
We need tax reform. But we also need to have an honest debate, in Congress and with the American people, about the policies that are going to help keep American businesses competitive with their counterparts around the world. In a time of decreased economic activity and lower revenues, some will find the temptation of deciding who is not paying their “fair share” and taxing them in order to pay for more big spending hard to resist. These talking points aimed at short-term political gain won’t get us there.
Changes to the corporate tax code should be done within the scope of comprehensive tax reform. We have a complex system, and reforming it will be a monumental task. But it’s a task that will be worthwhile for the competitive future of our country. Success of American employers around the globe will mean a stronger economy and more jobs here at home.
Tiberi is a member of the House Ways and Means Committee.