October 9, 2017 1 COMMENTS
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Tax reform is a unique opportunity to drive economic growth

James T. Brett

Congress returned to Washington last month with quite a daunting to-do list. They were able to quickly check off a few items — helping storm victims, funding the government, and extending the debt ceiling on a short-term basis. Still on this list are healthcare and immigration reform — both issues that will not be easily resolved.

However, there is one important economic priority where we are seeing significant momentum and a general consensus from the White House and Capitol Hill, and that is tax reform.

The last time Congress passed comprehensive tax reform was over 30 years ago and few would argue that the time has come to update our nation's tax code. The New England Council believes that we must modernize our tax code in such a way that it will drive economic growth, increase American competitiveness in the increasingly global economy, and promote American innovation.

While our members — which include businesses and organizations of all sizes across a broad range of industries — have various individual priorities, the Council offers several recommendations for our Congressional leaders as they tackle tax reform in the coming weeks and months.

First, tax reform must be comprehensive. As House Ways & Means Committee Chairman Kevin Brady (R-TX) has often noted, "tax reform is truly one of those once-in-a generation opportunities." As such, a tax reform package deserves to be bold, and that means it should include both corporate and individual changes in the same deal.

While the business community is, of course, concerned with how tax changes will impact their own industries and firms, they are also concerned with the well-being of their employees as well as the customers they serve. Making tax reform truly comprehensive will help ensure that all Americans benefit.

Second, any tax reform legislation that moves forward should focus on simplification of the tax code. We hear time and again from our members that the tax code is far too complex; that it is difficult to monitor, hard to interpret, and at times harder to comply.

According to some estimates, more than 4,400 changes have been made to the U.S. tax code over the past decade alone. By making it easier to file taxes and read the code properly, businesses will have the ability to spend less time and effort completing onerous paperwork and more time making and selling goods and serving their customers.

Third, reforms to our tax code must be permanent to provide certainty for businesses. Knowing what to expect for years to come is critical in making long-term plans related to workforce, equipment and projected growth. In recent years, we have seen a number of temporary tax credits and short-term extensions, which have caused significant unease for businesses. The certitude that comes with knowing what the country's tax code will look like long term is a critical element to help grow the economy, and it should be incorporated into any tax reform package.

And last but most certainly not least, our tax code must be updated to make American companies more globally competitive. We live in a global economy and many businesses based here in New England and across the country operate globally. The United States' worldwide system of taxation and a high corporate rate together create an uncompetitive tax regime that hinders companies' abilities to compete with foreign competitors and incentivizes inversions.

An important goal of tax reform should be to level the playing field for American businesses by lowering the corporate tax rate and changing the way we tax overseas profits to promote domestic reinvestment of such proceeds. In addition, companies with similar operations should be taxed equitably, whether located within the United States or operating globally.

As this debate moves forward, the New England region is fortunate that our interests will be well represented by the dean of the New England Congressional delegation, Rep. Richard Neal (D-MA), who earlier this year became the ranking member on the Ways & Means Committee.

As Congressman Neal and his colleagues on Capitol Hill continue this important work in the weeks and months ahead, we hope they will take these recommendations into account. Tax reform presents an extraordinary opportunity for our leaders to make much-needed and long-overdue changes that will drive economic growth, create jobs, and support continued innovation here in New England and beyond.

James T. Brett is the president & CEO of The New England Council, an alliance of business, academic and health institutions, and public and private organizations throughout New England.

Comments

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fred.carstensen@att.net

10/11/17 AT 08:36 AM
No, tax reform (which isn't on the table) nor tax cuts (which is the focus) will NOT lead to significant new investments or job creation. Two obvious problems with this assertion. First, American companies are already sitting on mountains of cash, both abroad and in America: they aren't investing it. Giving them more money isn't going to change their willingness to invest in expansion. Yes, they have some use for the money--more share buybacks, extraordinary dividends, and M&A, all of which they are already doing and none of which will deliver much stimulus to the economy. Second, America has become progressively less competitive--not because of the tax code, messy as it is, but because America has systematically failed to invest in itself: infrastructure and human capital. We once were #1 in both; now: not so much. Our infrastructure is decaying, imposing an annual tax on the economy larger than the proposed tax cuts. That decrepit infrastructure puts American business at a significant disadvantage--and nothing is on the table to even begin addressing this challenge. America also has a poorly prepared workforce; our college graduation rate now lags many of our competitors, all of whom graduate a much larger share of their college age cohort AND many more of them are in the critical STEM fields. Add to that that America has the WORST worker retraining program of any of the advanced economies and we have fewer and fewer apprentice programs. IBM now has more workers in India than America because there it had find the workers with the skill sets it needs, something it can not do in America now.

The reality is America has now much less competitive than it was; it is becoming less competitive almost daily. Fine, tweak the tax code, but don't deceive yourself that this is going to MAGA.
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