America's current economic recovery continues to lag behind all those that have come before it in the post-war era, mostly because of the continuing mess in Washington. Higher taxes, more government regulation of the business sector, crony capitalism, and reckless spending do not point the way to the solution – yet that is all the Obama Administration seems willing to offer.
America needs another dose of the medicine given it under Warren Harding and Calvin Coolidge, under Jack Kennedy, and under Ronald Reagan. America needs a significant tax reduction that removes the shackles binding the engine of prosperity, keeping it in neutral.
There will be those, predictably, who will argue that another round of tax cuts will only add to the deficit. This is an economic fallacy, arising from the assumption that the economy and personal behavior are static. In a growing economy, even lower tax rates will produce increased revenue to the federal government, though that should not be the primary reason for pursuing such a strategy.
A dynamic economy is constrained by bean counters; having the books balance is not nearly as important as having an economy that adds jobs on a monthly basis, lifts people out of poverty, allows a few lucky people to become extremely wealthy, and improves living standards for all Americans.
One important step down that road would be to make America more competitive in the global economy. Right now, the United States has the highest corporate tax rate in the world. Not only that, taxes on business are structured in such a way as to keep money that could be brought home and invested here parked in other countries, creating jobs in China and Argentina and Turkey.
While lost on the Washington politicians, this is a message that has not been missed on Wall Street or in the nation's corporate board rooms. The leaders of some of America's best known and largest companies are stepping up, practically begging Congress to take up the job of tax reform so that they can get back to what they do best: Growing their companies and growing the economy.
To mark the one year anniversary of America having the world's highest corporate tax rate, 21 CEOs from major companies are writing the House Committee on Ways and Means and the Senate Finance Committee calling for comprehensive reform of America's tax code. "This rate makes American businesses less competitive and makes the U.S. a less attractive place for investment, ultimately harming businesses, investors, workers and consumers," the group of CEOs noted in the letter, written on behalf of the RATE Coalition, a group of 30 companies and organizations advocating for sensible corporate tax reform.
"It has been more than a quarter century since comprehensive tax reform was last enacted and, like in 1986, we face a divided government with many doubting our chances of success," the letter said. "However, we are confident that bipartisan reform – reinforced by your leadership – will put us on a path that leads to broad economic growth and job creation."
"Today is the one-year anniversary of America receiving the dubious distinction of having the world's highest corporate tax rate," said James P. Pinkerton, co-chair of the RATE Coalition and former White House domestic policy adviser to Presidents Ronald Reagan and George H.W. Bush. "Unfortunately, our world-leading rate continues to dampen economic growth and job creation here in the United States. Yet fortunately, thanks to the growing bipartisan support for tax reform that lowers the rate and broadens the base, this year is the best opportunity for serious and effective tax reform since 1986."
"While one year of having the world's highest corporate tax rate is one year too long, its is undeniable that bipartisan momentum is growing for tax reform that will make American businesses more competitive," said Elaine Kamarck, co-chair of the RATE Coalition and former White House adviser to President Bill Clinton and Vice President Al Gore. "With support both from President Obama and among Congressional leaders, now is the time for bold action on comprehensive tax reform."
The support for tax reform on the corporate side continues to grow on Capitol Hill. Michigan Republican Dave Camp, who chairs the powerful House Committee on Ways & Means, has repeatedly gone on record promising to write and bring to the House floor this year a comprehensive tax reform package that addresses both the corporate and personal income tax. The Senate, which is controlled by the Democrats, has had less to say on the subject, but with so many blue senators from red states up for re-election in 2014, the possibility of assembling a pro-tax reform coalition over the next twelve months is a very real possibility.