If you've spent much time reading the news the past few days you already know that good news has been few and far between. Our credit rating has been downgraded because of unsustainable debt, the stock market has plunged as the world economic outlook remains uncertain, and the U.S. economy isn't growing fast enough to put a dent in unemployment.
But in an increasingly globalized marketplace, our pain can be other countries gain. Sadly, rather than attempt to alleviate the problem, Washington has only made it worse by maintaining the second highest corporate tax rate in the developed world. As the LA Times reported today,
Many major U.S. companies are making big plans to expand overseas even as some of them announce new layoffs at home, and there's a chilling reason why: They're beginning to give up on the American consumer as a source of future growth.
For years, U.S. companies went off shore to get cheaper labor and lower manufacturing costs for products to be sold to Americans. Now, as the nation's economy stalls and personal incomes stagnate, they see consumers in Asia and Latin America as offering brighter prospects for future sales and profits.
In effect, as many corporate executives look ahead, the United States has a diminishing place in their thinking.
The nation's tax laws reinforce the pattern. American companies have piled up mountains of profits overseas, but they must pay very high taxes if they bring the money home. So instead of investing back home, they are more apt to put the money into overseas expansion, adding jobs there.
If America wants to remain a viable destination for capital and hold its spot as the world's top economy, our elected representatives must begin to take steps to make our corporate tax code more competitive. While fundamental reform of the tax code may take time, there is a step Washington could take immediately to encourage businesses to bring money and investment back to our shores - a corporate tax holiday. Representative Kevin Brady's (R-TX) "Freedom to Invest Act" would do just that, allowing companies torepatriate foreign earnings at a rate of 5.25 percent for one year. Read more about NTU's efforts to support this bill by clicking HERE.