Senator Levin’s Irresponsible Tax Approach

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When it comes to identifying policymakers who will champion bipartisan, constructive approaches to fix our outdated, broken tax system and help U.S. companies to innovate, compete and create jobs, don’t count Senator Carl Levin among them.

For several years, Senator Levin has used his position as Chair of the Permanent Subcommittee on Investigations to conduct a campaign to embarrass American companies for doing what any responsible business does every year:  pay the taxes they legally owe, enabling them to invest more in strengthening American innovation and creating American jobs. 

Senator Levin’s Subcommittee will continue its misbegotten adventure with a hearing next week focused solely on Apple.  Fortunately, while Mr. Levin takes this combative approach, Democrats, Republicans, businesses, and civil society leaders are collaborating to create a better, more modern tax system.  In April, Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Dave Camp, R-Mich., announced a set of reform principles that they jointly developed after more than 50 hearings and thousands of hours of analysis and deliberation. 

That’s real leadership that offers real hope for stronger economic growth.

The system is broken.  Instead of bashing great American success stories like Apple, it would be far more productive for Senator Levin to work with his colleagues, Chairmen Baucus and Camp, and come up with a modern tax system that frees up U.S. companies to rely less on lawyers and invest more in innovators.

When it comes to corporate tax reform, Msrs. Baucus and Camp want to level the playing field for U.S. businesses that are facing serious foreign competition:

 

The current U.S. corporate tax rate is the highest in the world.  Yet in recent years, some of America's largest corporations have paid zero tax.  The current system picks winners and losers and puts the U.S. companies at a disadvantage in the global economy, a situation that hurts job creation. Tax reform must make our companies more competitive in the global economy.

…..

There are skeptics who question the prospects for bipartisan tax reform.  We know we face some fierce headwinds.  People from across the spectrum are trying to turn tax reform into a political weapon, which could end up killing any chance at success.

We can't let that happen.  Tax reform can't be about politics.  It has to be about the people we serve, about boosting the economy, about creating jobs in Montana, Michigan and across America.  It has to be about restoring some trust in the process of government.

 

Again, that’s real leadership, and certainly not the kind of message we will hear from Senator Levin. Amazingly, he faults U.S. global companies for using resources to minimize their tax burden, while “edging right up to the legal line.”  Ask any head of a household if he or she does the same thing before April 15.  We all scramble for deductions to reduce our tax bill.  Ask company shareholders – the real owners of a company – and employees how they would feel if their corporate executives sought to pay the lowest taxes legally possible while investing in their wages, in new R&D, and in new manufacturing.  All would agree:  It’s the responsible thing to do.

Perhaps Senator Levin should ask Apple’s executives this question:  Would you rather hire a creative product developer or a savvy tax lawyer?  The answer will be the product developer, hands down.

Our industry has stepped forward with ideas.  The U.S. needs a modernized tax structure that will help America’s companies to create jobs and new opportunities here at home.  To remain a step ahead of our rivals for jobs and investment, America needs a competitive, market-based tax structure with a lower rate that encourages U.S. innovation.  Experts agree that this approach would make U.S. companies more competitive, boost wages here at home, and encourage U.S. companies to bring their foreign earnings home.  Just reducing the corporate rate to 25 percent would create an average of 581,000 jobs each year for the next ten years.  That’s a real solution, with real jobs and higher take-home pay as a result. 

Next week’s hearing should be about responsibility:  The responsibility of business executives to minimize tax burdens for the good of their shareholders and co-workers, and the responsibility of policymakers to fix a broken tax system for the good of their constituents and country.  Sadly, that’s not the hearing we are likely to see.

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