Senate Finance Committee Chairman Orrin Hatch (R-UT) said a top priority of tax reform is lowering the U.S. corporate tax rate from one of the highest in the world to one of the lowest.
“Our high corporate tax rate isn’t just a burden on faceless corporations or rich shareholders. The burden is disproportionately borne by the factory workers, the scientists, and even the janitors who work for corporations, large and small,” Hatch told his colleagues in a speech on the Senate floor this week.
He said a reduced corporate tax rate would allow American companies to better compete internationally and would result in fewer businesses moving offshore.
“A reduced corporate tax rate would incentivize more new companies to set up shop in the U.S., and lead more established companies to invest their capital and hire workers here, rather than in lower tax jurisdictions found in places like Canada, the U.K., Ireland, or elsewhere,” Hatch said.
The United States has the highest statutory corporate tax rate in the developed world. America’s effective corporate tax rate – the actual rate paid after deductions and credits – ranks fourth among G-20 countries.
“While I’m no fan of inversions or foreign takeovers or aggressive tax planning techniques that shift profits around the globe in search of low taxes, and I don’t want to see any unnecessary erosion of the U.S. tax base, I can hardly fault any company for simply responding to the incentives created by our business tax system and the competitive actions of other countries who’ve been lowering their corporate tax rates,” he added.
Between 1983 and 2003 there were just 29 corporate inversions in the United States. From 2003 and 2014 there were 47 – nearly double the number in half the amount of time, Hatch said.
“Our shared goal should be to make the United States an inviting place to locate a business, invest, hire workers, and create new ideas and products, but that will not be the case so long as we cling to our punitive corporate tax system,” Hatch said.