Candidates: It’s Time to Commit to Comprehensive Tax Reform
February 26th, 2016
      by Ryan Dunn, Executive Vice President of Corporate and Government Affairs, Executive Director, Virginia Chamber PAC Executive Director, Virginia Wins

Ryan Dunn VA ChamberOn the eve of this Tuesday’s presidential primary election in Virginia, it is time for the candidates to publicly embrace comprehensive tax reform in America.  The current system has been allowed to evolve into an unwieldy, overly burdensome, wildly complicated, and wholly unfair mess.  The current tax code penalizes success, impedes innovation, discourages growth, and undermines American competitive fitness on the world stage.  It has also been used as an instrument for artificially picking winners and losers in a market place that was intended to function without the heavy hand of an activist federal government.

Politicians have talked about reform for more than 30 years.  Here are a few reasons why comprehensive tax reform is now a critical issue:

  • At 39 percent, America’s corporate tax rate is the highest in the industrialized world. That’s a title we hold despite the downward trend in the worldwide tax rate, the average of which has dropped from 29.5 percent to 22.6 percent.  That glaring tax disparity has left U.S. companies with a huge disadvantage as they compete with their foreign counterparts.  It has also discouraged investment and hampered job growth.
  • The worldwide tax system under which our government levies taxes on international business income penalizes American companies simply for being American companies; when collecting taxes on U.S.-headquartered companies, our government fails to distinguish between income which is earned abroad and that which is earned at home; all of it is fair game.  We engage in this self-handicapping tax policy while most of the rest of the world – and every one of our trading partners – operates under a territorial system,collecting taxes only on income earned within their own borders.  This means that America’s foreign business competitors are the beneficiaries of an inherent bias within our own tax code.  That is indefensible.
  • The U.S. tax code is being used to pick winners and losers in the market place. Elected officials within the U.S. Government have long wielded the tax code to punish industries with whom they disapprove, and to reward those industries they favor.  As an example, the government has gifted the U.S. renewables industry with enormous taxpayer subsidies, conservatively estimated by the International Energy Agency to be upwards of $88 billion annually.  At the same time, the government appears to be waging tax war against the traditional energy sector, promising to strip the Section 199 domestic manufacturing deduction solely from the oil and gas sector, while leaving it untouched for other industries, even though virtually every company in the Dow Jones Industrial Average qualifies for this tax deduction.  In fact, President Obama’s recently released budget proposed to eliminate eight tax provisions the industry receives under the incorrect allegation that the industry receives subsidies when in fact they are deductions.  The U.S. government must stop meddling in the market place, burdening American employers and employees alike, and picking winners and losers with the tax code.

U.S. House Speaker Paul Ryan and several other influential office holders have said they intend to achieve comprehensive tax reform.  It’s now time for the presidential candidates who seek our vote, and who currently dominate each news cycle, to capitalize on their media power and commit to doing the same.