Is Obama's Corporate Tax Plan A Good Idea? >
Lowering the Corporate Tax Rate a Good Start
A rate above that of its trade partners will keep U.S. at a competitive disadvantage, so cooperation is key
February 24, 2012
About Elaine Kamarck:
Elaine C. Kamarck is co-chair of the RATE Coalition. She is also a lecturer in public policy who came to the Harvard Kennedy School of Government in 1997 after a career in politics and government. She was one of the founders of the New Democrat movement that helped elect Bill Clinton president.
When Japan lowers its corporate tax rate on April 1, the United States will have the highest corporate tax rate among industrialized nations. That's why it was very good news when, earlier this week, the Obama administration proposed plans to lower the corporate income tax rate to 28 percent and take steps to broaden the base.
In these polarized times, we now have a rare point of agreement. This administration, Republican and Democratic members of Congress, and the nation's leading employers have come together over the proposition that a meaningful reduction in the rate, combined with a broadening of the base, is necessary to allow U.S. businesses to compete in today's global marketplace. This continued momentum and bipartisan support in all branches of government presents a unique opportunity to accomplish such a significant milestone in an election year.
[GOP Candidates Could All Add to Federal Debt.]
The RATE Coalition, a group of 26 companies and organizations employing approximately 30 million people across all 50 states, supports corporate tax reform. We welcome the Obama administration's recognition of the negative impact the current 35 percent corporate tax rate has on our economy. While a rate reduction of 28 percent is a step in the right direction, the goal of all parties should be to lower the rate to 25 percent, the average of Organisation for Economic Co-operation and Development, or OECD, countries. There are many advanced economies with even lower rates—Switzerland has an 8.5 percent rate and Ireland has a 12.5 percent rate. A corporate tax rate that is above the OECD average will only keep U.S. corporations at a competitive disadvantage. We understand that the country needs deficit reduction and hope that as the analysis of possible offsets is completed we can get to the lower rate.
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- Other Arguments
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No — Reform is needed, but the corporate tax plan does not go far enough
NICK TUSZYNSKI, Fellow at George Mason University's Mercatus Center
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Yes — The president advances a coherent if imperfect framework that includes excellent proposals
CHUCK MARR, Director of Federal Tax Policy at the Center on Budget and Policy Priorities
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No — The real goal should be to fund public investment and address the deficit
STEVE WAMHOFF, Legislative Director of Citizens for Tax Justice
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No — Proposals will put the U.S. further out of step with international competition for capital
WILLIAM MCBRIDE, Economist at the Tax Foundation
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Yes — By targeting unfair tax breaks, Obama has sharpened the distinction between his proposals and those of the GOP
EILEEN APPELBAUM, Senior Economist at the Center for Economic and Policy Research
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No — Obama proposal plays favorites, and would simply make matters worse
RYAN ELLIS, Tax Policy Director at Americans for Tax Reform
