"The U.S. economy cannot thrive when we have the highest corporate tax rate in the industrialized world."
WASHINGTON – The National Retail Federation today told Congress that lawmakers need to lower the nation’s corporate tax rate in order to remain competitive in the global economy and to keep high taxes from hampering job creation.
“The U.S. economy cannot thrive when we have the highest corporate tax rate in the industrialized world,” NRF Senior Vice President for Government Relations David French said. “Americans cannot sit by any longer and watch other nations continue to reduce corporate tax rates and attract our businesses and jobs. We must compete for this investment in our country and our workers.”
French called tax reform “vitally important to the U.S. economy,” saying it would “have an immediate positive impact on economic growth, real wages and consumer spending.”
French’s comments came in a letter to the Senate Finance Committee, which is scheduled to hold a hearing today on tax reform for businesses. The hearing is the second in a series, following one held last week on tax reform for individuals and another scheduled next week on international tax issues.
French noted that the U.S. corporate tax rate of 35 percent is the highest in the industrialized world, and that U.S. companies pay almost 39 percent when state corporate taxes are included. By contrast, the average rate for Organization for Economic Cooperation and Development nations is 24.7 percent, and several countries have already passed laws that will lower their rates over the next few years. Retailers benefit from few of the deductions and tax credits that lower tax bills for other industries, and pay at or close to the full 35 percent.
French cited a recent NRF analysis that shows that the average employee of a U.S. “C” corporation is paid $4,690 less per year because of high corporate taxes. The analysis shows that reducing the corporate tax rate to 20 percent could result in higher wages or the creation of between 500,000 and 1.5 million new jobs.
French called for tax reform that would eliminate most tax breaks in favor of “substantially lower” rates for all businesses. He said reform should be neutral among types of business so that companies are not favored on their form of legal entity (such as C corporations vs. small “pass through” businesses that pay taxes as part of the owners’ personal income tax), how they own their property (leased stores vs. owned) or distribution channel (online vs. bricks and mortar). Tax reform should also provide an adequate transition period after passage. And reform should not shift the burden to consumers, as would have occurred under the border adjustment tax proposal defeated earlier this year.
About NRF
NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.