International Tax Reform Would Benefit Nebraska & The Nation

One of the most significant challenges holding back the American economy is our overly complex and outdated tax code. Instead of having tax policy to encourage hiring American workers and investing here in the United States, our obsolete tax system incentivizes businesses to leave profits and jobs overseas. This dynamic is stifling job growth here in Nebraska and across the country. If we are serious about stimulating our economy, it is time to reform the tax system to make the United States a more competitive place to invest and create much-needed jobs.

We have the second highest corporate tax rate in the world – and if Japan reduces theirs as planned, ours will soon be the highest. Corporate tax reform that includes a competitive rate and a "flatter" system as a whole is a good first-step. If we are taxing our employers more than other countries tax theirs, how can we expect job creators in the U.S. to thrive and hire more Americans here at home? Other counties are actively reforming their international tax codes and the result has been increased job creation and economic growth. Congress needs to eliminate the unintended incentives that have effectively created jobs overseas.

This week the House Ways and Means Committee, on which I serve, took the first major step to reform the international tax code. Our current international tax system is a relic from nearly 50 years ago. As a result, American employers are now facing double taxation, unlike most of their foreign competitors – paying U.S. taxes on top of the tax they already pay in foreign counties. No other major economy taxes profits which already have been taxed by the country in which they were earned.

The need for comprehensive tax reform has been universally recognized by economists and both political parties as central to maintaining America’s competitive advantage in an increasingly dynamic and global economy. With unemployment remaining above 8 percent for 32 straight months despite all of Washington’s ‘stimulus’ spending, it is clear what we really need are major structural reforms like international tax reform to finally get our economy back on track.

Under the current tax code we are losing ground. Instead of spending money we don’t have, we need to take a look under the hood of the American economy and undertake meaningful, comprehensive tax reform. This will grow our economy and lead to more solid tax revenues. Nebraska--and America-- cannot wait.

Smith is a member of the House Committee on Ways and Means and its subcommittee on trade. For more information about this issue, the latest developments in Congress, or to sign up for Rep. Smith’s e-mail newsletter, please visit https://adriansmith.house.gov.

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