Welcome to the U.S. Congress! Now Let’s Get the Economy Moving Through Tax Reform
Now that the dust has settled on a bruising election season, we at ITI would like to formally congratulate all the newly elected members of the Class of 2012. With tax reform a key priority for the continued growth of the tech sector and the revitalization of the U.S. economy, we are looking forward to working with these freshman members of the House and Senate, along with those re-elected and currently in office on this critical issue during the 113th session of Congress.
The fact that tax reform is a key issue in the minds of many Americans was not lost on a number of several Senators-elect during campaign season. Senator-elect and former Governor Tim Kaine (D-VA), who won a tough election in Virginia, spoke sensibly in favor of a lower corporate tax rate, a broader tax base, and the removal of exclusions and reductions. Similarly, Senator-elect Martin Heinrich (D-NM) recognized that the U.S. corporate tax rate is the highest in the world, and proposed a “corporate flat tax” that would be somewhere in the mid-teens, a serious reduction from the 35 percent rate that U.S. companies currently face. At the same time, Senator-elect Heidi Heitkamp (D-ND) put forward a plan for tackling the fiscal crisis that included corporate tax reform, noting that to stay internationally competitive, the U.S. must reduce the corporate tax rate. Heitkamp’s plan also affirmed the need to incentivize U.S. companies operating overseas to bring back foreign profits to America and create jobs at homes. Senator-elect Ted Cruz (R-TX) also proposed significant corporate tax reform that would combine a lower tax rate along with additional reforms to encourage U.S. companies to make investments here in the U.S. with the money they earn overseas.
With the kind of forward-leaning thinking on the future of the U.S. economy from these and other newly elected members, there is broad optimism that members of Congress, Republicans and Democrats, can come together on a tax reform deal that will mean new opportunities, new businesses and new jobs. The contours of such an agreement are already in place and are recognized by these Senators-elect, and many other new and current members. First, we must reduce the significantly high corporate tax rate. Secondly, we must move towards a competitive market-based tax system (known to tax wonks as a “territorial” tax system), thus allowing domestic-based companies to bring home their foreign earnings without the risk of double taxation. Finally, we must have permanent tax incentives to promote and sustain breakthrough research and development, and retain valuable intellectual property here in the U.S.
After the disappointment of the 112th Congress, there is much hope that the members of the Class of 2012 will be the catalysts for bipartisan action. Many have spoken eloquently on the campaign trail of the need for comprehensive tax reform, and now they have the chance to take their policy proposals and achieve real policy change for their constituents and their country.