Corporate Tax Reform
With estimates of $1 trillion in U.S. companies’ cash and cash-like investments currently outside U.S. tax jurisdiction, adjusting the current rate corporate tax rate to one that is comparable to other developed-nations could generate nearly $950 billion in deployable resources within the U.S. and allow those earnings to stimulate domestic industry. The U.S. corporate tax code should reflect a rate that encourages U.S. companies to grow their markets and invest their earnings within U.S. boundaries. AFP believes that achieving this goal will require a comprehensive reduction in the U.S. corporate tax rate to a level on par with competing developed-countries. With a rate exceeding 39%, the U.S. currently maintains the highest effective corporate tax rate globally.
Both U.S. Congress and the White House have offered proposals to address the inadequacies of our current tax code. Notably, in October 2011, House Ways and Means Committee Chairman Dave Camp (R-MI) unveiled an international tax reform discussion draft that would lower top tax rates for both individuals and employers to 25 percent. Also included in the draft is a plan to transition the United States from a worldwide system of taxation to a territorial system.
President Obama also proposed a major overhaul of the nation’s corporate tax code that would lower the nation’s corporate tax rate to 28 percent. At the same time, his plan aimed to boost overall revenue from corporate taxation by banning numerous deductions and tax loopholes. AFP issued responses following the release of both proposals, offering the perspective of treasury and corporate finance professionals.
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