Keeping U.S. Tax Rates Competitive in a Global Marketplace

For the economy to expand, create jobs, and attract foreign investment at its full potential, businesses – both domestic and foreign – must be able to plan with confidence and make decisions based on economic fundamentals. Tax rates that are unreasonably high and rules that are complex, inconsistent, and ever-changing complicate business decision making, undermine pro-growth incentives, and distort the rational allocation of economic resources. With that in mind, the Forum strongly supports a business tax system that is reasonable, fair, consistent, and reliable.

The most fundamental business tax reform priority is to reduce current tax rates. The U.S. statutory tax rate of 39 percent is the second highest among OECD countries, and well above the average rate of 31 percent. Moreover, many of our industrial nations – including Germany, France, Japan, the United Kingdom, and China – have either announced or signaled significant reductions in their corporate tax rates. Given the competitive challenges of an increasingly global economy, business tax policy must be a central feature of any meaningful competitiveness agenda.

The Forum supports tax policy that enable the U.S. economy open to create jobs and attract foreign investment.  Imposing additional taxes and fees on the financial sector will restrict the availability of credit, increase the tax burden on investors and impede the ability of the financial sector to create jobs.

The Alliance for Savings and Investment

The Forum is a member of The Alliance for Savings and Investment (ASI), which represents a diverse group of dividend-paying companies, investor organizations, and trade associations committed to strengthening the U.S. economy through policies that foster private savings and capital investment.

With regards to the potential capital gains and dividends tax hikes, ASI supports the following:

• Maintaining the existing differential rate for capital gains and dividends taxes for all taxpayers before the automatic increase is enacted in January 2011.
• Making permanent the differential tax rates on capital gains and dividends in order to provide certainty to investors and stability to the economy.
• Making permanent the relationship between capital gains and dividends taxes and their differential status.

If Congress fails to act, the capital gains and dividend tax rates will automatically increase on January 1, 2011. ASI is concerned that a tax hike on capital gains and dividends would severely harm U.S. competitiveness thus making our companies and businesses less attractive to investment and will have a detrimental effect on our economic recovery.  Without action this year, many taxpayers could see their tax bill on savings and investment rise considerably.  This tax hike would disproportionately impact retirees who rely on dividends as a source of income. 

ASI believes that it is crucial for Congress and President Obama to act quickly to ensure that Americans are not hit by these types of tax increases next year.

Find out more at www.theasi.org.