In the next few weeks, millions of students will graduate from college or high school, seeking opportunities to join the American workforce. Most will remain unemployed for months – or longer.
Today, the Labor Department announced just 69,000 jobs were added to the U.S. economy this month, pushing the unemployment rate to 8.2 percent and failing to provide the necessary opportunities for the millions of graduates who will be looking for work – let alone the nearly 15 million Americans who are currently unemployed.
The costly big-government social programs that have dominated this administration’s approach to the economy have stunted economic growth, failed the American workforce and obstructed our nation’s path to a more prosperous future. Truly, the best social program is employment and, rather than unproductive spending programs, that must be the federal government’s focus.
The single best way to reverse America’s anti-growth policies is to eliminate today’s ever-changing, overly complex and expensive corporate tax code, which discourages foreign investors from building businesses in America, damages job creation, reduces wages, and leads to inefficient government programs and policies.
Today’s corporate tax structure was designed before most of this year’s college graduates were born. In those 25 years, the world has changed, our economy has evolved, and businesses have adapted to globalization. When introduced the 35 percent corporate tax rate was one of the world’s lowest, America has fallen behind as our competitors have reformed. The United States now has the globe’s highest corporate tax rate and is 10 percentage points greater than the global average of 25.5 percent.
Our archaic tax policies are driving businesses – and jobs – out of America. One in four business owners who have decided to relocate outside the U.S. did so to attain lower corporate tax rates, according to a 2012 study by the Harvard Business School (HBS). Moreover, nearly 80 percent of surveyed business owners said America’s tax policies are falling behind other economies.
Business owners are also concerned about the corporate tax code’s complicatedness. In fact, according to the HBS study, more than 60 percent of surveyed businesses said the tax code – in terms of complexity – was below average when compared to our competitors. Politics has muddied the waters surrounding the corporate tax code. Savvy politicians have created countless loopholes for favored constituent businesses, putting politics before policy and generating a complex and ineffective tax structure.
Reducing the corporate tax rate and simplifying the tax code can provide real benefits that sustainably boost jobs numbers and hold the potential to put our graduates to work. In fact, simply reducing the rate to 25 percent and eliminating loopholes could create an average of 581,000 jobs each year for the next decade.
It is important to note the benefits of a lower corporate tax rate are not simply realized by corporations. The average American family of four could see wage and benefit increases of approximately $2,500 annually, if the rate was dropped to 25 percent. This is a clear contrast to the social programs put forth by this administration. Temporary government programs may help families get by, but they are not sustainable and do not allow Americans to make a living for themselves and in doing so strengthen our economy as a whole.
Big-government programs and recycled tax dollars will not put our graduates to work, but developing an environment where the private sector is creating jobs and foreign companies are relocating to the U.S. will. We are not a nation of government handouts. We are a nation of opportunity – opportunities created by innovators and entrepreneurs, private businesses, and trailblazers so young people and experienced professionals alike can decide their own future, support their own family and chase their own American dream.