President Obama renamed the summer of 2010 “Recovery Summer,” but two years later, our economy sits at a standstill and millions of Americans remain unemployed – many of which have not been able to find work since the since the so-called “Recovery Summer.”
This morning, the U.S. Department of Labor reaffirmed what the millions of unemployed and underemployed Americans already know: our economy has not recovered and it won’t under the current policy regime. In addition to announcing the unemployment rate has settled at 8.2 percent, the Labor Department revealed just 80,000 jobs were added to the economy – hardly enough to even maintain current employment numbers. Moreover, the more accurate U-6 rate, which includes those who are unemployed and those who have simply given up looking for a job, rose to 14.9 percent.
There is a lot of work to do in Washington. Federal regulators have shackled businesses from growing by tying their hands with red tape. Political gridlock has created an unpredictable environment for small businesses and large employers alike. Obama’s health care legislation puts an unprecedented burden on job creators – as well as every taxpayer. Perhaps most ignored, our nation’s archaic and expensive corporate tax code has left the United States in an uncompetitive place to do business in a global market.
Designed more than two decades ago, America’s corporate tax code is one of the most outdated in the developed world. As globalization transformed the marketplace, nations began to lower their corporate tax rate, among other policy changes, in order to increase their competitiveness and ability to attract foreign investment. The United States remained motionless (with the exception of creating tax loopholes for companies with powerful lobbyists) and now boasts the globe’s highest, most complex and least competitive corporate tax rate.
The financial burden and uncertainty of the corporate tax code cripples America’s ability to attract foreign investment, damages job creation efforts, and often leads to inefficient government programs and policies.
A 2012 Harvard Business School study on U.S. competitiveness found that foreign investors hesitate to engage in the United States economy because of the country’s unpredictable corporate tax code as well as the prohibitive tax rate.
The lack of investment is driving business out of America. From 2000 to 2011, the United States lost 46 Fortune Global 500 headquarters, while our competitors – China and Korea, for example – saw sizeable increases over that same period.
If we are to put the United States on the recovery track, reducing the corporate tax rate and simplifying the tax code must be one of the first steps federal lawmakers take. A Heritage & Milken study lends credence to this idea, concluding those two measures alone will create 500,000 to 2.2 million jobs in the United States.
Because workers bear up to 75 percent of the corporate tax burden, the average family of four could realize an additional income of $2,484 annually if the rate is reduced to 25 percent.
America has fallen behind on corporate tax reform and in effect, our economy has fallen behind. If we look back 25 years to when the tax code was last recreated, we see America’s emergence from a recession, rising to a leader of global investments. Washington lawmakers need to once again reinvigorate the economy by reinventing the corporate tax code: eliminating loopholes, lowering the tax rate, and allowing the U.S. economy to truly recover.