OPINION:
As the presidential debates get underway, we hope that the moderators set personalities aside and spend some quality time asking questions of both candidates about their plans to grow the American economy.
We represent both sides of the political spectrum and have worked for presidential campaigns in both political parties — often times in the very same election cycle.
Yet, for both of us, it is hard to think of a more enduring issue than getting our economy moving again.
A growing American economy helps to balance the budget. In fact, the last time that the federal budget was in balance came in the late 1990s, when our economy grew an average of 4.5 percent per year.
A growing American economy results in more opportunities to put people to work. Sure, the unemployment rate sits at 4.9 percent today, which — by historical standards — is considered full employment. But, that doesn’t count the millions of people who have completely given up on finding work. Indeed, the labor participation rate stands at near-historic lows.
A growing American economy is better for retirement security. The more people who are working and contributing to the Social Security and Medicare systems, the healthier these vitally-important retirement programs will be for tomorrow’s seniors.
A growing American economy also brings in more tax revenue, putting this country on a stronger financial footing for the long term.
Since we represent both sides of the political spectrum, it’s not surprising that we often have different views on the best ways to grow the American economy. One of us might prefer more government-centered solutions, and the other might prefer a greater reliance on the private sector.
But, one place where we both agree is on the necessity of tax reform. More specifically, we both believe that the next president and the next Congress must take up comprehensive tax reform, with a particular focus on the corporate tax rate.
At 35 percent, America’s corporate rate is the highest in the developed world.
The RATE Coalition’s 33/34 American companies, who pay an average tax rate of 32.5 percent, make up nearly one-third of all private sector employees and have experienced first-hand the punitive reality of playing by the rules by losing market share to competitors that have moved overseas to so-called tax havens.
It’s no secret that many Americans believe corporations don’t pay their fair share of taxes; our tax code is chock-full of loopholes. Some companies may not pay their taxes, but the RATE Coalition believes that closing those loopholes can help to inject some fairness back into the tax code.
We have advocated for a simple plan that we believe will grow the economy, keep American jobs in America, and keep American companies headquartered here, too. Our plan, if implemented, would get rid of tax loopholes and set the corporate rate at a globally-competitive 25 percent or less.
Setting a reasonable corporate tax rate would stop American companies from moving their headquarters overseas to low-tax jurisdictions like Ireland, where the rate is just 12 percent.
A more transparent tax code could also give corporations who have moved overseas an incentive to move back to the United States, and start investing again in the American workforce. And, it would make America a more attractive destination for businesses to invest and hire.
Leveling the playing field would also mean that the federal treasury could get more revenue. Today’s business tax regime is so complicated, and so full of loopholes, that some companies are notorious for gaming the system to avoid paying billions in taxes. A simpler and fairer tax code would end the games.
At the end of day, it comes down to the need to grow our economy.
Policymakers don’t have many opportunities to inject growth into our economy. The Federal Reserve has kept interest rates as low as possible, and still the economy remains sluggish. Stimulus programs have been attempted, and yet we still don’t have the economic vigor we need.
The only thing that really hasn’t been tried in the last 30 years is a comprehensive approach to reforming our Byzantine tax code.
It’s time to enact real reform to jump-start the economy.
The moderators of this fall’s presidential debates should ask the candidates: “What’s your plan to grow the economy?”
• Elaine C. Kamarck and James P. Pinkerton are RATE Coalition co-chairs.
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