WASHINGTON (PRWEB) February 21, 2017
Reforming America’s corporate tax code is one of the most important things Congress can do to boost U.S. economic growth, argues the Information Technology and Innovation Foundation (ITIF) in a new report out today. But given the tax code’s complexity and the divisive political environment, the country’s top tech-policy think tank urges lawmakers to focus first and foremost on provisions that spur the kinds of investments that drive innovation, productivity, and competitiveness and avoid getting bogged down in disagreements over less impactful measures that could derail broadly beneficial reform.
The new report outlines the five “must-have” policies that ITIF says corporate tax reform has to include to increase innovation and competitiveness, and five “nice-to-have” policies that should not hold up the reform process if lawmakers cannot reach agreement on them.
“This could be a once-in-a-generation opportunity to reform the U.S. tax code to increase domestic investment, productivity, innovation, and competitiveness—especially in the traded sectors that are so critical to economic growth,” said Joe Kennedy, ITIF senior fellow and the report’s author. “Policymakers need to keep their eye on the ball, though. By concentrating on a few key measures, Congress and the administration can reach consensus faster and avoid letting less-critical proposals bog down or derail the reform process.”
For corporate tax reform to successfully boost economic growth by accelerating innovation and productivity, ITIF argues it must include the following components:
1. A substantially lower corporate statutory rate;
2. A maximum rate on foreign profits of 15 percent, with credit for foreign taxes and the elimination of deferred taxes on foreign profits;
3. An enhanced research and development tax credit;
4. An innovation box; and
5. Strong incentives for capital investment.
“Any tax reform bill that includes these provisions deserves support,” said Kennedy.
Kennedy warns that there is a real danger that disagreements over a host of other items could prevent a majority of legislators from reaching agreement on the most important components. These include individual tax reform, a lower effective rate, border adjustability, immediate expending, and interest deductibility. Although many of these “nice-to-have” reforms would be beneficial, they should not be allowed to jeopardize the overall reform effort.
“Compared to other industrialized nations, the U.S. tax code is antiquated, burdensome, and way overdue for reform. But it’s easy to underappreciate the scale of the job before Congress,” concluded Kennedy. “In order for corporate tax reform to succeed in boosting economic growth, lawmakers should focus on the most essential changes that will have the greatest effect on innovation and competitiveness. Leaders need to push the hardest for consensus on these items and then move quickly toward compromises on other issues. Otherwise, we may have to wait another generation to finally fix the corporate tax code.”