Over the past decade, the economy has struggled at just two percent GDP growth as the country has experienced the worst recovery in the modern era. While the post-World War II average remains at three percent GDP growth per year, the Congressional Budget Office projects that under current policies, two percent growth will continue into the next decade.
Even as the unemployment rate has stabilized in recent years, labor force participation has continued to drop, indicating that the economy remains weak. Because of this lackluster recovery, families have lost an average of $8,600 in annual income, according to one estimate.
One reason for the stagnant economy is the fact that the U.S. tax code is outdated, uncompetitive, and complex. The current code restricts the growth of new jobs, increases the cost of capital, and discourages innovation.
It has been more than 30 years since the tax code was reformed, and in that time, the world has changed drastically. Other countries have updated their tax codes and lowered their rates, while the U.S. system has barely changed.
The uncompetitive code means that businesses are unable to compete in the global economy. For instance, our uncompetitive code enables foreign competitors to acquire assets at a far greater pace than American businesses.
Over the past decade, U.S. companies have suffered a net loss of almost $200 billion in assets. Conversely, if the corporate rate was 25 percent (the average rate in the developed world), one report estimates U.S. businesses would have instead experienced a net gain of $600 billion in assets over the same period.
Tax reform is the only way to reverse these trends and enact policies that benefit the economy. ATR President Grover Norquist recently submitted a statement for the record before the House Ways and Means Committee hearing entitled ‘How Tax Reform Will Grow Our Economy and Create Jobs Across America.’ The recommendations are below and the full paper can be found here.
- Tax Reform Should Reduce Taxes on Businesses
- Tax Reform Should Reduce Capital Gains Taxes
- Tax Reform Should Implement Immediate Full Business Expensing
- Tax Reform Should Simplify the Code
- Tax Reform Should Make Permanent Changes to the Code
- Tax Reform Should Move to Territoriality for Businesses and Individuals
- Tax Reform Should Kill the Death Tax and Gift Tax