Taxes

April Fool: U.S. to Have Highest Statutory Corporate Tax Rate

March 30, 2012
| Blogs & Op-eds

If we want to quicken the pace and get back in the lead in the global innovation race, we should shed the distinction of having the highest statutory corporate tax rate and reduce the effective tax burden on firms investing in the building blocks of innovation and competing in global markets. Instead, we are dragging our feet on corporate tax reform, getting bogged down with rhetoric about corporate welfare from the left and a focus on lowering individual tax rates from the right.

Austrian firms can receive a tax credit of 6 percent on the costs of education and training their workforce.

Workers switch jobs more frequently today and U.S. companies tend to invest for the short term. These factors help account for why U.S. companies invest about half what they used to for training today as a share of GDP compared to a decade ago. It is important for the United States to adjust training incentives to the realities of today's labor mobility. One idea would be to expand the R&D tax credit to include expenditures focused on the skills of the workers. This would not only lower the corporate tax burden but also enhance the skills and competiveness of the U.S. workforce.

Analysis: Tax Break Goes Far Beyond the Factory Floor

Reuters
Many of the models that economists use still think we are a closed economy where we don't really compete with other countries.

Baucus Calls for Scrutiny of Business Tax Depreciation Rules

Bloomberg
If anything, investment incentives should be enhanced, because of what countries such as the U.K. are doing to encourage innovation, said Rob Atkinson.

Senate Hearing on Tax Reform Options: Incentives for Capital Investment and Manufacturing

March 6, 2012
| Testimony and Filings

Congress has an opportunity to reform the corporate tax code to explicitly promote the competitiveness of business establishments in America by expanding, not cutting, incentives for investing in America, including the domestic production deduction, the R&E tax credit, and accelerated depreciation. Ideally, Congress would also establish new incentives, such as an investment tax credit for new machinery, equipment and software investment (replacing accelerated depreciation) and a “patent box” incentive, as a number of European nations have recently put in place that taxes corporate income from innovation-based products at a lower rate.

This is not to say that corporate tax reform should not reduce or eliminate special deductions, exemptions and credits that cannot be justified on a productivity, innovation or competitiveness basis. Indeed, a reconstituted corporate tax code which eliminates incentives that do not spur growth could have some positive, albeit likely modest, impacts on growth. But if a dogged faith in simplicity ends up reducing and even eliminating incentives that spur productivity, innovation and competiveness, reform will lead to less economic growth, not more. So the choice should not be between a corporate tax code riddled with particular exemptions and credits and a completely neutral code. Rather the code should reduce ineffective exemptions and incentives while expanding effective ones focused on innovation and growth-enhancing activities characterized by significant spillovers or other market failures, all the while lowering the effective, and statutory, corporate rates.

FRB-Atlanta Meeting on Market Conditions for Small Business Growth

March 5, 2012
| Presentations

On March 5, 2012, Senior Analyst Stephen Ezell will participate in a round table for the Federal Reserve Bank-Atlanta on market conditions for small business growth and access to risk capital.

Both Winners and Losers Are Cool to Obama's Corporate Tax Reform

The Hill
“The major thing the tax code needs to do is ensure that companies that are in global competition are not disadvantaged,” says Rob Atkinson.

Experts React to Obama’s Corporate Tax Proposal

The Washington Post
White House released its proposed principles for overhauling the corporate tax code — bringing the rate down to 28 percent, establishing a minimum tax, and expanding credits for R&D and manufacturing.

ITIF Urges More Emphasis on Competitiveness in Corporate Tax Reform

(WASHINGTON) - In response to President Obama's corporate tax reform framework announced today, ITIF president Rob Atkinson made the following comment:

"It is a no-brainer that we need to overhaul corporate taxes. It is unfathomable that the United States has the second highest statutory and among the highest effective corporate tax rate in the world (even if the administration data suggest that our effective tax rate is on par with other nations). So the Obama Administration deserves credit for taking this on. Read more »