Resolution Urging Congress to Cut the Federal Corporate Tax Rate and Adopt a Home Country Tax System

Resolution Urging Congress to Cut the Federal Corporate Tax Rate and Adopt a Home Country Tax System

Summary:

This resolution encourages Congress to cut the 35 percent federal corporate tax rate and replace the U.S.’s “cross-border” tax system with a “home country” tax system in order to improve the ability of the 50 U.S. states to compete for international investment and jobs in the global economy.

Model Resolution:

WHEREAS, it is the mission of the American Legislative Exchange Council to advance Jeffersonian principles of free markets, limited government, federalism, and individual liberty, and

WHEREAS, at a combined federal-state rate of 39.2 percent, the United States imposes the highest overall corporate tax rates in the industrialized world, much higher than the OECD average of 25 percent, and

WHEREAS, the federal corporate tax rate of 35 percent undermines the ability of every U.S. state to compete against lower-tax nations such as Canada, China, Great Britain, Ireland, Korea, Singapore, and Japan, and

WHEREAS, there have been at least 133 major corporate tax cuts globally since 2006—making it more difficult for U.S. states to attract new business investment and jobs, and

WHEREAS, unlike the U.S., most of the U.S.’s international competitors employ home country tax systems (i.e., territorial systems that impose little or no tax on foreign-source income) to enhance their international competitiveness, and

WHEREAS, the combination of a high U.S. corporate tax rate and a cross-border (i.e., worldwide) tax system contributes significantly to the migration of companies and jobs out of the United States, and

WHEREAS, corporate taxes have been found to be the most harmful tax for long-term economic growth by reducing investment, entrepreneurship, productivity, and wages, and

WHEREAS, the federal government has no official policy regarding U.S. tax competitiveness, and

WHEREAS, a member of the Japanese Diet recently commented: “With most of the world—Japan included—cutting corporate tax rates and employing territorial tax systems to remain competitive, the U.S. must surely know that its hesitancy to do these things is handing the advantage to its international competitors.  They will suffer from that hesitancy while we and others outside the U.S. will benefit,” and

NOW THEREFORE BE IT RESOLVED, that the legislature of the state of {insert state} urges the United States Congress to adopt a competitive U.S. corporate tax system that features a substantially lower corporate tax rate and home country taxation, and

BE IT FURTHER RESOLVED, copies of this resolution will be distributed to all governors and members of the U.S. Senate and the U.S. House of Representatives.

Approved by the ALEC Board of Directors, October 19, 2012

Keyword Tags: Tax and Fiscal Policy Task Force

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