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A Letter in strong support of H.R. 1834, the “Freedom to Invest Act of 2011.”
May 24, 2011
The Honorable Kevin Brady United States House of Representatives 301 Cannon House Office Building Washington, DC 20515
Dear Representative Brady:
On behalf of the more than 362,000 members of the National Taxpayers Union (NTU), I write in strong support of H.R. 1834, the “Freedom to Invest Act of 2011.” By providing U.S. companies with the option of repatriating their income earned overseas at a reduced tax rate, your bill would provide a much needed boost to an economic recovery that is showing troubling signs of weakening.
Due to high corporate income tax rates, United States companies are continually finding themselves at a significant disadvantage in the globalized marketplace. Among Organization for Economic Cooperation and Development (OECD) countries, the average statutory corporate tax rate has fallen from about 48 percent in the early 1980s to 25.5 percent in 2010. By contrast, the U.S has not reduced its top corporate tax rate since 1993 and has a combined (federal and state) rate of near 40 percent.
The United States also has the ignominious distinction of being among a shrinking minority of nations (both developed and developing) that tax business income earned outside national borders. Under this “worldwide” system, businesses must cut a check to the U.S. Treasury to make up for any shortfall between the taxes paid abroad and our own corporate income tax rate. These outmoded rules and punitively high rates create an enormous disincentive for businesses to bring their foreign earnings back into financial institutions here at home.
H.R. 1834 would temporarily improve these uncompetitive conditions by allowing companies to repatriate foreign earnings at a rate of 5.25 percent for one year. Similar legislation in 2004 resulted in the repatriation of $312 billion and was a factor in the economy growing at a rate of4.3 percent in 2005.With even greater sums of money being kept overseas today (estimates are as high as $1.43 trillion), this bill would allow companies to reduce debt, increase investment, create jobs, and reduce pressure to raise prices. Furthermore, because companies who repatriate foreign earnings will do so in dollars, H.R. 1834 could be a significant boost to our currency value, which would reduce prices and inflation.
Congress can and should pursue fundamental reform of our corporate tax structure with a focus on reducing America’s tax burden and instituting a “territorial” tax system. Nevertheless, repatriation is a positive interim step that will bring investment back to our shores and provide a boost to economic growth. For these reasons, NTU endorses H.R. 1834 and will classify any vote in favor as the “pro-taxpayer” position in our annual Rating of Congress
Sincerely, Brandon Greife Federal Government Affairs Manager
108 North Alfred Street Ø Alexandria, Virginia 22314 Ø Phone: (703) 683-5700 Ø Fax: (703) 683-5722 Ø Web: www.ntu.org