Would you expect a 1986 automobile to be practical and wise to drive in 2017? Of course not. Much has changed in fuel efficiency, safety features, and of course styling and performance. Car manufacturers understand the need to constantly improve their product.
Yet in America people and companies are forced to comply with a federal tax system that was last overhauled in 1986. Much has changed in America and the global marketplace that demands we look at our tax structure. Like the outdated 1986 car, the current tax system is inefficient, impedes economic performance and is cumbersome to the end user.
The Ohio Chamber of Commerce is a champion of free enterprise, economic competitiveness and job growth for the benefit of all Ohioans. We believe a fair and competitive tax system is vital to ensuring that Ohio businesses can flourish and create well paying jobs that allow workers to support their families.
As Congress begins debate on comprehensive tax reform, the Ohio Chamber of Commerce urges our federal representatives to seize the opportunity to support measures that will reduce taxes on business and individuals, simplify the tax code, and make our nation more competitive in the world economy.
Today, most Ohio businesses pay far more in federal taxes than their competitors in other nations. According to the Organization for Economic Co-operation and Development, the average corporate tax rate among member nations is 24 percent. Yet, the United States has the highest corporate tax rate among all member nations—including Australia, Canada, China, Germany, and the United Kingdom—at 35 percent. This is one reason why companies leave the United States to pursue opportunities elsewhere. Other tax systems allow them to keep more of their profits, thereby allowing them to reinvest in their businesses.
If Ohio is to increase both foreign and domestic investment, we need our representatives in Washington to make the tax code more competitive so companies trust that their investment here is better than anywhere else. A more equitable corporate tax rate will help drive investment.
Nearly every member of the Ohio Chamber of Commerce – large and small companies alike – has to enlist tax professionals to help prepare and file their federal tax returns. In fact, according to the National Taxpayers Union, 94 percent of all Americans use tax professionals or software to help prepare their taxes.
Put simply, the United States tax code has ballooned out of control. In 1939, the tax code and its supporting documents constituted 504 pages; in 1984, it reached 26,300 pages. By 2014 the code and its documents had swollen to 74,608 pages in length. Just think of the money spent to understand and comply with this overwhelming tax code, and think how those funds could be used for more productive activity.
Ohioans have been fortunate to have their state taxes reduced and simplified in the past several years. No doubt, there is more to be done at the state level, but our state economy, businesses and many of our fellow citizens are better off for the progress made to date.
Thirty one years ago, President Reagan and the bipartisan leadership in Congress enacted the Tax Reform Act of 1986, the last truly comprehensive federal tax reform effort. This measure lowered corporate and individual tax rates, eliminated loopholes and greatly simplified the tax code. The result? A period of robust economic growth and significant job creation for many years.
Over the next few weeks, President Trump and Congress have a once-in-a-generation opportunity to reform our tax code to benefit our nation. The Ohio Chamber of Commerce urges our federal representatives to seize this historic opportunity to fundamentally reform the federal tax code, allowing our economy, businesses and people to flourish for years to come.