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NTU Supports Rising Tides Act of 2011
May 2, 2011
Honorable Tim Scott
Dear Representative Scott,
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write in support of H.R. 937, the “Rising Tides Act of 2011.” By significantly lowering federal corporate tax rates and taking the first step toward a territorial system of taxation, your legislation would indeed create a rising tide of economic prosperity and job growth that is sure to lift all boats.
America’s current tax system exerts a tremendous drag on the economy as businesses must carry around a cumbersome ball and chain consisting of heavy tax rates tethered to double taxation. When combined with state taxes, American corporations face an average burden of nearly 40 percent, 10 percent higher than the median rate in other developed nations. Even countries like France, Sweden, and the Netherlands, which are hardly renowned for their free-market conditions, levy lower corporate rates than the United States. In fact, according to “Paying Taxes 2011,” a study jointly published by the accounting firm PricewaterhouseCoopers and the World Bank Group, the United States now ranks an embarrassing 124th out of 183 countries worldwide in total tax rate faced by a typical corporation.
Equally as painful is the federal government’s tax treatment of business income earned abroad. The United States is among a shrinking minority of nations that tax business income earned outside national borders. Together, our outmoded “worldwide tax” system and punitive corporate tax rates create a disincentive for businesses to bring profits earned abroad back onto U.S. shores, decreasing capital investment and hurting economic growth. Without reform, this onerous regime will hurt our ability to compete in the globalized economy.
If passed, H.R. 937 would take much-needed steps to ensure America remains an attractive destination for entrepreneurs, investment, and job creators. By dropping the corporate income tax rate from 35 percent – the second-highest in the developed world – to 23 percent, the Rising Tides Act will attract an inflow of capital as well as more taxable business activity to the United States. Moreover, your bill will allow for permanent repatriation of foreign profits. Such a move would encourage multinational firms to bring the nearly $1.2 trillion they are holding overseas back into our economy, allowing them to invest in research, purchase new capital equipment, and hire new workers.
Our current corporate tax structure is in dire need of reform, and your bill ensures that we remain competitive in the global economy. For that reason, NTU endorses H.R. 937 and any roll call votes on this legislation will be significantly weighted in our annual Rating of Congress.