Growth Proposals From Two Business Groups Released Ahead Of President's Jobs Speech Tonight

Growth Proposals From Two Business Groups Released Ahead of President's Jobs Speech Tonight

(Sept. 8, 2011) A recent tax reform study released by the U.S. Chamber of Commerce argues that a corporate tax holiday would act as a stimulus for the private business sector.

The report, prepared by American economist and former Director of the Congressional Budget Office, Douglas Holtz-Eakin, argues that a temporary repatriation tax incentive could expand the U.S. economy by as much as 4 percent over two to three years. Not only would a holiday create as many as 1.6 million to 4.2. million jobs, suggests Holtz-Eakin, but it would also increase the nation’s gross domestic product (GDP).

Many large, multinational corporations are backing the notion of repeating the tax holiday, a policy that was enacted in 2004, which allowed companies to bring back to the United States overseas profits at a reduced rate – 5.25 percent as opposed to the 35 percent corporate rate. Opponents argue that another holiday would encourage the storage of profits abroad and would not have a significant impact on promoting job creation.

Texas Republican Congressman Kevin Brady, who serves on the House Ways and Means Committee, has introduced bipartisan legislation (H.R. 1834) calling for an immediate tax holiday. The report suggests that the tax holiday is a good first step toward moving to a territorial tax system, which would create a permanent low tax on repatriation.

To read Holtz-Eakin’s report, click here.

Separately, Andrew N. Liveris, chairman and CEO, The Dow Chemical Co., who serves as vice chair of the Business Roundtable, issued a statement today on behalf of BRT, announcing the group’s Roadmap for Growth, which he says contains proposals for President Barack Obama and Congress to consider to “move the country forward.”

Among the steps political leadership can take, the roadmap notes, there should be an immediate focus on:

·         Promoting export-related jobs: Boost export-related employment by submission and passage of the free trade agreements with Colombia, Korea and Panama that would create an estimated 250,000 American jobs; inaction could cost 400,000 jobs. Every day of further delay means that U.S. competitors gain advantages in these important markets.

·         Improving U.S. tax competitiveness: Any proposals should move us closer to lowering and flattening the corporate tax rate that is currently the second highest in the developed world.

·         Restraining the growth of regulations: Billions of dollars in regulatory compliance – new equipment or new labor mandates – diverts from dollars available for investment.

·         Embracing America’s great energy potential: The United States has vast domestic energy resources that can keep energy costs affordable and strengthen U.S. energy security. Let’s develop those resources.

Business Roundtable “believes the fundamentals of American business remain strong and with the right policies in place the American people will see future economic growth that benefits overall prosperity.”

Prepared September 7, 2011 by Caitlin Gropp (cgropp@financialexecutives.org), legislative aide, Government Affairs, Financial Executives International (FEI). This summary does not represent FEI opinion specifically noted above.