Thirty-member Organization for Economic Cooperation and Development (OECD) calls U.S. tax law too complicated, so much that it stifles needed investment in American economy.

WASHINGTON – The United States tax code is choking off savings and investment, according to a recent report by the Organization for Economic Cooperation and Development (OECD). The study concludes that the tax code is unnecessarily inefficient and complicated and leads to decreased investment from home and abroad.

The OECD, an organization of 30 member nations "sharing a commitment to democratic government and the market economy," says the U.S. tax code is biased against savings and investment via excessive taxation on dividends and capital gains. These taxes, in effect, target productive activities that would otherwise create jobs, increase income and improve the economy as a whole.

"The excessive taxation on capital gains and corporate income is making the United States a less desirable place to do business," said taxpayer advocate Grover Norquist, who heads Americans for Tax Reform (ATR) in Washington. "When Europeans understand this and America does not, trouble is at hand."

The study also criticizes the tax code for its complexity, especially in the business sector. Taxation and the cost of compliance can be equally excessive. Businesses may spend as much as half the yield of the tax in order to hire professionals to comply with confusing tax codes and to minimize payments. The complexity of the corporate tax code, not the tax rate, may be the culprit for decreased foreign investment, once the incentive to invest in the U.S. diminishes.

"We already have to compete with other nations over tax rates," continued Norquist, "and now we discover that another lethal weapon has been thrown against the business sector: the complexity of the tax code."

The solution, according to the OECD, is to enact permanent tax reforms. Short-term stimulus actions do not target the initial problem. Even exemptions, deductions and credits contribute to the complexity of the tax code according to the OECD. "The elimination of a number of phase-outs would provide simplification for up to 30 million filers," the OECD study said. Not only are high rates an anethema to investment – as complexity increases, which requires more resources to be devoted to tax compliance, the incentive to invest in the U.S. decreases.

"When investors head to France and Sweden for low taxes," continued Norquist, "American policy-makers should take off the rose-colored glasses that are obscuring the plethora of flashing red lights."