The common perception in Washington these days is that comprehensive tax reform is dead. The D.C. pundits say Capitol Hill wants to move on, and the election calendar dictates that lawmakers turn their attention to the midterm elections. But what remains of the evolving economic threats that caused us to take notice of the need for tax reform in the first place? The short of it is that those challenges are only mounting and grow realer with every passing day.
And as much as political leaders talk about ensuring greater opportunity for American workers, they continue to overlook the importance of overhauling our tax code, and specifically our international tax laws, in order to strengthen America's economic competitiveness.
Without a doubt, such wide-ranging reform would be a challenge. But it doesn't make sense that as a nation we continue to compete in a 21st-century global marketplace with international tax laws that were last revised when President Kennedy was in the White House.
What's worse, many of the lawmakers who are talking reform are too often pursuing tax policies that will actually hurt, not help, American workers and the ability of our nation to generate the kind of economic and job growth we desperately need. Others are taking a piecemeal approach that will further complicate efforts for comprehensive reform while doing nothing to make us more competitive.
Under the current system, U.S. companies are subjected to the highest corporate tax rate in the world: approximately 40 percent. And not only do American companies that conduct business overseas have to pay foreign taxes, but they also are subject to this high domestic corporate rate when they bring their foreign earrings back to home to invest. As a result, U.S. companies have incentives to invest everywhere but at home.
This punitive tax code is creating an environment where foreign companies can more easily acquire globally engaged U.S. companies, or, more disturbingly, American businesses are pushed to merge with foreign partners in order to lower their tax liabilities. One need only look at the latest financial headlines to see that pharmacy giant Walgreens is looking to reincorporate overseas, moving their headquarters abroad and turning their U.S. operations into a mere subsidiary.
Unfortunately, this is just the latest example of tax policies that threaten to turn our economy upside down. According to recent reports, at least 10 U.S. public companies moved abroad or announced plans to move abroad between 2009 and 2012, and at least four more moved in 2013. The transactions include American icons like Chrysler and Chiquita Banana, as well as lesser-known but no less important companies across the country.
This is a trend that will only grow if meaningful action isn't taken. Members of both parties continually voice their dissatisfaction with how our current international tax laws respond to the realities of our interconnected economy. But it is no longer enough to simply recognize that our tax code is failing our nation interest. We have to put comprehensive tax reform on an achievable course correction.
Indeed, the time for reform is long overdue. Foreign competition in the global marketplace doesn't wait for Washington to act, and neither should American companies and workers. We need a bipartisan solution before we lose any more competitive ground. That is why the members of the LIFT America Coalition will continue to work with Congress and the administration in the pursuit of meaningful international tax reform in 2014 and beyond.
Let's Invest for Tomorrow (LIFT) America is a coalition of U.S.-headquartered companies, trade associations and economic stakeholders representing industries that are critical to the American economy. To strengthen American competitiveness in the global marketplace, the coalition supports a modern, hybrid international tax system -- similar to the one used by our trading partners -- that would promote increased U.S. investment while protecting America's tax base.