The Issue

Comprehensive Tax Reform

The U.S. tax system has failed to keep pace with the changing global economy, becoming an outlier at a time when capital is more mobile and the world’s economies are more interconnected than ever before. Modern, streamlined and fiscally responsible tax policies contribute to a competitive business environment that attracts new investment and supports strong economic growth and job creation. Many countries have modernized their corporate tax policies in response to the increasingly important role that national corporate tax rates play in many investment and plant location decisions. Unfortunately, the United States has not followed suit. 

The last significant overhaul of the U.S. corporate tax system was in 1986 — before the widespread use of the Internet, before the Soviet Union collapsed, and before China became a modernizing economy — and much existing policy dates back to the 1960s and earlier. Most of the policies introduced in the interim have been patchwork solutions that are often temporary in nature. As a result, U.S. corporate tax policy has become increasingly outdated and overly complex, making the United States a less attractive site for new investment and placing U.S. companies at a competitive disadvantage in the global marketplace.

Lower the Corporate Tax Rate

The U.S. combined statutory corporate tax rate currently stands at 39.1 percent, the highest in the developed world. In contrast, the average combined statutory corporate tax rate in other OECD countries is only 25 percent.  

There is bipartisan agreement that America’s current corporate tax rate is burdensome and needs to come down. The high rate stands in the way of economic growth, currently at less than 2 percent per year, frustrating millions of American workers looking for jobs. 

End Double Taxation of Foreign Earnings

Most current U.S. international rules for taxing foreign-earned income were enacted in the 1960s and reflect the realities of a different era. It’s time we unlock potential for domestic investment by transitioning from the uncompetitive “worldwide system” to a “territorial system” that will promote growth and jobs in the U.S.

The United States is now the only G-8 country to use a “worldwide” tax system, which collects taxes on the earnings of U.S. foreign subsidiaries when they are brought back to the United States. The vast majority of OECD countries, excluding the United States, employ a  “territorial” tax system, where a company’s sales in foreign markets are taxed only by the country where the profits were earned – and not taxed again when profits are reinvested in the home country.

Simplify the Corporate Tax Code

American businesses are forced to comply with a corporate tax code that has not been upgraded in decades. Streamlining the current corporate tax system will minimize the financial burden of compliance costs on American businesses, freeing up more capital for growth and expansion, which directly leads to new jobs.

Reform the Corporate Tax Code in a Fiscally Responsible, Revenue-Neutral Way

Business Roundtable wants America to take back its home court advantage, beginning with a modernized, streamlined and fiscally responsible tax system that includes a competitive corporate tax rate and an end to double taxation of foreign earnings. The Roundtable advocates that these reforms be achieved in a revenue-neutral manner by relying solely on broadening the base of the corporate tax system. Research has shown that a competitive corporate tax code will have a substantial, positive effect on U.S. businesses of all sizes and the economy at large.

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Latest Resources

Press Release
Comprehensive Analysis Details Widespread Benefits to Economy, Workers and Businesses; Roundtable Says with Improvements, Camp Discussion Draft Could Produce Even More Growth
Resource
In response to widespread concerns that the income tax system in the United States is highly inefficient, unfair, unnecessarily complicated, and discourages economic growth while putting US multinational companies at a disadvantage relative to their foreign competitors, numerous proposals for sweeping reforms have been advanced in recent years.
Resource
On February 26, House Ways and Means Committee Chairman Dave Camp (R-MI) released a comprehensive tax reform discussion draft representing the most significant proposal for revamping the U.S. tax system in over 30 years.

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