The Speaker of the House wants a lighter tax burden for U.S. businesses, which he believes will spur domestic investment, capital build-up and employment.
The United States has “one of the worst” business tax codes in the world and will wither in the global economy without tax reform to stimulate repatriation and domestic investment, according to U.S. Speaker of the House Paul Ryan.
Ryan’s comments come at a time of increased focus – and debate – on the U.S. tax code, which hasn’t been substantially revamped since 1986. President Donald Trump has made an overhaul of the tax system a priority of his agenda. He and fellow Republicans, like Ryan, are seeking lower tax rates for businesses under the theory companies will take the money they would have spent on taxes and invest it in domestic operations.
“We will broaden the base and lower the rates, plug loopholes and get faster economic growth. And those things combined – a broader tax base but a more internationally competitive tax system – those things combined, we believe, will give us faster growth and a more resilient tax code,” Ryan said.
“…A broader tax base but a more internationally competitive tax system – those things combined, we believe, will give us faster growth and a more resilient tax code.”
Ryan’s Wisconsin First Congressional District includes communities that have struggled to find their economic place as U.S. manufacturing has declined. Competitiveness was a theme he revisited again and again.
“We compete against Canada every day in Wisconsin, and we’re taxing Wisconsin manufacturers at like 40 percent when Canada’s taxing theirs at 15 percent,” he said. “It is putting us at an enormous disadvantage. This is about jobs and competitiveness and growth and keeping your business in America and making things in America.”
“This is about jobs and competitiveness and growth and keeping your business in America and making things in America.”
Ryan first cast business-friendly tax reform in a positive light, extolling the benefits he says will flow from cutting the rate on businesses from 34 percent to 20 percent.
“We believe the inducements we have in this bill are such that they will lead to more investment and bigger job growth and higher wage growth. Telling companies what they must do with their money – that is not a business we want to give into…simply getting American businesses more competitive is what we’re focused on, and giving them an inducement to invest in their people and their plant(s) and their equipment in America,” he said. “We will have rash of inversions if we don’t get this done”
Ryan then painted a darker picture of what, in his view, will happen without tax reform.
“If we don’t do this, the flip side of (not) getting this reform done, is our code is going to be so punitive more and more companies are either going to leave or be bought by foreign firms, and their headquarters go as a result. That is not good for our economy, and we have to, in this 21st century global economy, make our code more competitive so we can have jobs and growth right here in this country,” he said.
To illustrate his point, Ryan pointed to Johnson Controls, a formerly Milwaukee-based company that relocated to Cork, Ireland in January 2016.
As for where tax reform goes from here, Ryan employed a whitewater rafting analogy to show he expects the most turbulent period is yet to come.
“We’ve been going through Class 3 rapids, which is a pleasant ride. It’s nice. Everybody pretty much stays in the boat and it’s pretty good,” he said. “But we’re about to go through Class 5 rapids, which is the biggest rapid you can go through.”
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