- Bold tax reform is needed to promote growth and create jobs.
- The retail industry pays among the highest effective corporate income tax rates today.
- Attention was called to the limited scope of the President’s reform framework.
In a letter to President Barack Obama, Retail Industry Leaders Association (RILA) president Sandy Kennedy thanked the President for drawing attention to the need for tax reform, but urged the Administration to pursue the bold comprehensive tax reform needed to promote growth and create jobs.
"While your plan addresses some of those special preferences, it retains many, resulting in an improved but still tilted playing field and preventing deeper reductions to the overall rate. Moreover, your proposals for special lower tax rates for particular industries further perpetuates the advantages that the tax code provides for certain sectors of the economy to the detriment of a balanced tax system that fosters overall economic growth and job creation," said Kennedy in the letter sent in response to the President’s corporate tax reform framework announced earlier this week.
In addition to being one of the largest private-sector employers, providing nearly 15 million jobs, the retail industry pays among the highest effective corporate income tax rates today. Consequently, RILA supports comprehensive tax reform that broadens the base and substantially lowers the rate, simplifies and stabilizes the tax code, and eliminates the double taxation of foreign earnings, because it will free U.S. companies to invest, expand their businesses, and most importantly, create new jobs.
“Mr. President, with 12.8 million Americans out of work and looking for work, and 2.8 million more who have given up trying, comprehensive tax reform that spurs investment and job creation cannot come soon enough,” said Kennedy.
RILA noted that the U.S. corporate income tax rate will soon be highest among the 34 Organisation for Economic Co-operation and Development (OECD) nations and that by only reducing the corporate income tax rate to 28 percent U.S. businesses would still be at a disadvantage to 30 of OECD nations.
“A reduction to 28 percent (33 percent when combined with state tax rates) would leave the United States with the fourth highest corporate tax rate among OECD countries. If we are serious about giving U.S. businesses the ability to compete effectively in the global marketplace, a substantial reduction in the corporate income tax rate is essential,” added Kennedy.
RILA pointed to a 2007 Department of Treasury report, entitled “Approaches to Improve the Competitiveness of the U.S. Business Tax System for the 21st Century,” that suggested the economic benefit of lowering the corporate income tax rate to 28 percent would be “modest” and that lowering the rate to 20 percent “could potentially produce larger economic benefits.”
Finally, RILA drew attention to the limited scope of the President’s reform framework and that reform of the dizzying and incoherent rules imposed on consumers were left unaddressed.
“If we agree that the corporate tax system desperately needs to be reformed, than we must also agree that the individual tax rules demand the same overhaul. Like businesses, consumers deserve a tax code that is equitable, coherent and administrable,” said Kennedy.
Read the full letter here.
