House Speaker Paul Ryan (R- Wisconsin) met before employees at Intel yesterday at Hillsboro, Oregon and gave remarks about enacting a pro-growth tax policy that includes reforming America’s tax system.
Speaker Ryan claimed in his address that the U.S. has arguably the “worst tax system in the industrialized world” and reminded the tech audience that the tax system hasn’t been reformed since 1986.
Corporations are taxed at the 35 percent tax rate in the U.S. which Speaker Ryan believes is too high, although many corporations have taken advantage of tax loopholes to pay far less than 35 percent.
Speaker Ryan pointed out that Canada has a 15 percent corporate tax rate and Ireland has 12.5 percent and it’s difficult for American businesses to compete.
“And so one of the big, great problems we have is we’re basically taxing American businesses out of America. We’re making it really hard for American businesses to compete and succeed in the global economy because of our tax system” Speaker Ryan said.
Concerning tax repatriation, which involves cutting the 35 percent corporate rate and allowing corporations that have parked $ 2 to 3 trillion overseas to bring that money back to the U.S. and pay taxes on their profits at a lower tax bracket, Speaker Ryan maintained that the U.S. has to get those corporate tax rates down.
“So we have two to three trillion dollars of American profits parked overseas that can’t come back to be reinvested in our communities because of our tax laws. So we’ve got to get these tax rates down” Speaker Ryan said.
“The average tax rate on companies in the world is 22.5 percent. And when we’re taxing American businesses 35 to 45 percent, that makes us very, very uncompetitive” Speaker Ryan added.
Believing that lowering corporate taxes is the correct measure needed to make corporations to remain headquartered in the U.S. and create more American jobs, Speaker Ryan, a Republican, believes that corporations will apply their tax savings from a tax repatriated holiday and reinvest in projects like growing R&D and expanding more plant and equipment which is highly debatable because during George W. Bush’s last tax repatriated holiday in 2004 the tax savings went to line the pockets of stock holders in the form of receiving more dividends and stock buybacks and the tax savings did little to grow or stimulate the economy.
Congress approved a 5.25 percent tax rate on repatriated foreign profits under the American Jobs Creation Act of 2004, and the corporate tax rate dropped considerably from the 35 percent corporate tax rate.
Under the 2004 tax repatriation holiday, corporations transferred $362 billion in overseas accounts to the U.S. and the tax savings was mostly used to pay dividends to their shareholders, utilize share buybacks, and purchase other corporations.
Still House Speaker Ryan was trying to convince employees at Intel yesterday that lowering corporate taxes will trickle down to the main street America and benefit all Americans.
“And so we are convinced that if we get our tax rates down on all of our businesses….small businesses, big, and everything in between…..then we can be far more globally competitive, and we can make it make more sense to keep our companies based in America. What does that mean? That means our headquarters stay here. And when our headquarters stay here, that means the affinity and the attachment to the community stays here” Speaker Ryan said.
“That means the Boys and Girls Club gets more funding. That means United Way and local churches and charities get more community support like clearly you do here in Portland” Speaker Ryan claimed.
Senate Democrats in 2011 opposed another effort for a tax repatriation and cited an article from the Wall St. Journal titled “Report: Repatriation Tax Holiday A Failed Policy” that claimed the previous 2004 tax repatriation cost the U.S. Treasury $3.3 billion and companies receiving the tax breaks cut over 20,000 jobs after receiving the tax breaks.
That Wall St. Journal article is no longer accessible on their website.
Yesterday Intel policy tweeted the following thank you message to Speaker Ryan:
@SpeakerRyan for visiting & trying out @Intel technology! Pleased to share ideas on making American manufacturing more competitive.”
— Intel Policy (@IntelPolicy) August 23, 2017
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