With the 2014 election now in the rear view mirror conservatives have a unique opportunity to move forward with true reforms to our economic, fiscal and tax systems that can show the American people that conservative policies work better.
In order to do this conservatives must come together on true reforms which can not only pass through Congress but which muster significant change. While this seems obvious it is not always something Republicans have done. In the past while the problems with our healthcare system festered and became obvious to the casual observer our elected officials did nothing and the solution we got, Obamacare, was far worse than if we had acted.
Today, I see our tax code as analogous. If Republicans in Congress fail to act, sometime down the line a less conservative Congress will act and we will not like the outcome.
Throughout 2013 and much of 2014, we have witnessed a surge in the number of corporations leaving U.S. soil. These companies are making the move overseas to find relief from a brutal business tax code, in a practice known as corporate inversion. The rate of inversions picked up so quickly, that the U.S. Treasury Department deemed it necessary to intervene with specific rulings in an attempt to curb the transactions, which were announced in late September of this year.
This spike in corporate inversions was not a random occurrence, rather an act of desperation from several U.S. companies coming to terms with the financial reality of our outdated tax code. The U.S. cannot maintain a leading position in the global marketplace and attract new investment and businesses, while also maintaining the oldest tax code in the developed world.
Corporate inversions are a rationale reaction to a tax system that is fundamentally broken and politicians have not found the will to make more competitive.
Inversions have served as an unwelcome, yet much-needed reminder that the U.S. tax code has not been touched by Congress in almost thirty years, since the Tax Reform Act of 1986 under the Reagan Administration. And through the nearly three decades of inaction, we’ve sustained a growth-stifling corporate tax rate of 39.1 percent – currently the highest corporate tax rate of any OECD member country, compared to the 25% average of other developed nations in the OECD.
It’s imperative that we mobilize existing bipartisan support and move forward with a comprehensive tax reform package in the 114th Congress. Concern for this issue has been raised on both sides of the aisle and there is a clear consensus from both parties that we are due for a major overhaul of our tax structure. We simply must pass comprehensive tax reform that streamlines the U.S. tax code and places American businesses and their employees at a competitive advantage.
Should we only treat the manifestations of our poor tax structure, as we did through September’s Administrative ruling instead of a comprehensive tax reform bill, we will more than likely lead ourselves down a path of greater regulatory complexity, less transparency and all-around bad business policy.
In fact, a Heritage Foundation study found that simplification and a reduction in the tax code would add almost 540,000 new jobs each year and increase our national gross domestic product (GDP) by a staggering $92 billion through the year 2032.
We can either continue to sink through failure to enact lasting reform, or we can swim, and develop a tax code that that will encourage U.S. companies to grow and create jobs here. Considering the ongoing partisan clashing on a multitude of issues in Washington today, it would be foolish to pass up on a rare opportunity to enact legislation that holds the promise of future prosperity for our country.