Interest in fundamental tax reform continues to grow in the United States. High marginal tax rates levied on business combined with an antiquated worldwide system of taxation mean the U.S. tax system lags behind its competitors. Further, as other countries make reforms to attract business and drive investment, the United States has stood still.
While Congress has not yet formally considered tax reform legislation, Congressional tax writing committees have held numerous hearings on tax reform issues, and the Chamber expects the tax reform debate to continue in earnest in 2013 and beyond. The Chamber believes any reforms must adhere to the following principles:
- Tax reform legislation should lower the corporate tax rate to a level that will enable U.S. businesses to compete successfully in the global economy, attract foreign investment to the United States, increase capital for investment, and drive job creation in the United States. Congress should consider the impact of a corporate rate reduction on passthrough entities.
- In addition to reducing tax rates, tax reform should eliminate the bias in the current U.S. tax system against capital investment. Capital investment should be expensed or recovered using a capital cost recovery system that provides the present value equivalent to expensing with due regard to the impact the system may have on cash flow.
- In the international arena, the current worldwide tax system should be replaced with a territorial system for the taxation of foreign source income to enable U.S. businesses to compete successfully in the global economy, as well as domestically against foreign firms, and to promote economic growth domestically.
- Changes should be permanent to ensure certainty for businesses striving to expand, create jobs, and remain competitive in the United States and abroad.
- Fundamental reform should take place in the near-term, and Congress should not, in the interim, adversely change the current tax policy.
- Congress preferably should pass comprehensive tax reform legislation; conversely, Congress should avoid undertaking tax reform on a piecemeal basis.
- In considering tax reform legislation, Congress should give equal attention to government spending to strike a reasonable balance with a tax code that fosters economic growth, job creation, and investment.
- Congress should enact simple, predictable and easy to understand tax rules to improve compliance and reduce the cost of tax administration.
- Tax reform legislation should ensure industry-specific neutrality and avoid special tax benefits or penalties targeted to one industry versus another. Tax reform should allow the marketplace, not the tax system, to allocate capital and resources.
- Comprehensive tax reform should include realistic transition rules to provide adequate time for implementation and help minimize economic hardships businesses may encounter in transitioning to the new tax system.
- Principles for Tax Reform
- January 20, 2011 - Testimony to The House Committee on Ways & Means on Fundamental Tax Reform
- March 3, 2011 - Testimony to The Subcommittee on Select Revenue Measures of the Committee on Ways and Means on Small Businesses and Tax Reform
- April 21, 2011 - Testimony to The House Committee on Ways and Means on the Need for Comprehensive Tax Reform
- May 12, 2011 – Testimony to the House Committee on Ways & Means on the Need for Comprehensive Tax Reform to Help American Companies Compete in the Global Market and Create Jobs for American Workers
- May 24, 2011 – Testimony to the House Committee on Ways & Means on How Other Countries Have Used Tax Reform to Help Their Companies Compete in the Global Market and Create Jobs
- September 14, 2011 – Testimony to the Senate Finance Committee on Tax Reform Options: Marginal Rates on High-Income Taxpayers, Capital Gains and Dividends
- November 17, 2011 – Testimony to The Subcommittee on Select Revenue Measures of the Committee on Ways and Means on International Tax Reform Discussion Draft
- July 19, 2012 – Testimony to the House Committee on Ways and Means on Tax Reform and the U.S. Manufacturing Sector
- September 20, 2012 – Testimony to the Senate Finance Committee and the House Committee on Ways and Means on Tax Reform and the Tax Treatment of Capital Gains
- April 2, 2013 – Testimony to the Tax Reform Working Groups on Tax Reform Principles and Priorities