Congress Must Take Action to Improve American Economic Competitiveness
August 15th, 2008
The economy is the #1 issue this election. While the focus has been on the impact of a stock market in decline, a housing market crashing, increasing unemployment and sky-high gas prices, very little attention is paid to how America’s business climate affects individual Americans.
A recent OECD study shows that our corporate tax rate is 50% higher than our economic counterparts, the second highest overall among industrialized nations. An earlier OECD study explained that corporate taxes are the single most harmful to economic growth, more so than personal income or sales taxes.
So how exactly does the corporate income tax hurt the average American? A recent CBO study showed that workers bear as much as 70% of the corporate tax burden! Plus, high corporate taxes stifle innovation and development, which have led to the type of progress that’s made America successful.
All eyes have been on a recent GAO study examining corporate tax payments from companies doing business here. This led to misleading media coverage announcing that two-thirds of corporations “avoided paying” corporate income tax in 2005. Some in Congress, like Sen. Byron Dorgan (D-ND), have used this as an opportunity to attack business, claiming “it’s time for big corporations to pay their fair share.” In fact, the report shows that 95% of profitable, large corporations paid taxes in 2005 and the vast majority of corporations that did not pay tax were not profitable.
Congressional candidates should ask how we can work to make America more competitive and in turn give Americans thrive more job and investment opportunities. First, they must realize we live in a globally integrated economy, that global business climate competitiveness matters. Congress should welcome a debate on how we increase our competitiveness. One clear action that would have a direct impact on Americans’ standard of living is reducing the corporate income tax that hurts American productivity, growth and innovation.
Congress’ continuing to accept the status quo will mean that future generations of Americans will not see the type of progress and growth that we have seen in our lifetime.
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