Dear Representative Brady:
On behalf of the more than 362,000members of the National Taxpayers Union (NTU), I write in strong support ofH.R. 1834, the “Freedom to Invest Act of 2011.” By providing U.S. companieswith 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 isshowing troubling signs of weakening.
Due to highcorporate income tax rates, United States companies are continually findingthemselves at a significant disadvantage in the globalized marketplace. AmongOrganization for Economic Cooperation and Development (OECD) countries, theaverage statutory corporate tax rate has fallen from about 48 percent in theearly 1980s to 25.5 percent in 2010. By contrast, the U.S has not reduced itstop corporate tax rate since 1993 and has a combined (federal and state) rateof near 40 percent.
The UnitedStates also has the ignominious distinction of being among a shrinking minorityof nations (both developed and developing) that tax business income earnedoutside national borders. Under this “worldwide” system, businesses must cut acheck to the U.S. Treasury to make up for any shortfall between the taxes paidabroad and our own corporate income tax rate. These outmoded rules andpunitively high rates create an enormous disincentive for businesses to bringtheir foreign earnings back into financial institutions here at home.
H.R. 1834 wouldtemporarily improve these uncompetitive conditions by allowing companies torepatriate foreign earnings at a rate of 5.25 percent for one year. Similarlegislation in 2004 resulted in the repatriation of $312 billion and was afactor in the economy growing at a rate of4.3 percent in 2005.With even greatersums of money being kept overseas today (estimates are as high as $1.43 trillion),this bill would allow companies to reduce debt, increase investment, createjobs, and reduce pressure to raise prices. Furthermore, because companies whorepatriate foreign earnings will do so in dollars, H.R. 1834 could be asignificant boost to our currency value, which would reduce prices andinflation.
Congress can and should pursuefundamental reform of our corporate tax structure with a focus on reducingAmerica’s tax burden and instituting a “territorial” tax system. Nevertheless,repatriation is a positive interim step that will bring investment back to ourshores and provide a boost to economic growth. For these reasons, NTU endorsesH.R. 1834 and will classify any vote in favor as the “pro-taxpayer” position inour annual Rating of Congress
Sincerely, BrandonGreife FederalGovernment Affairs Manager
108 NorthAlfred Street Ø Alexandria, Virginia 22314 Ø Phone: (703) 683-5700 Ø Fax: (703) 683-5722 Ø Web:www.ntu.org