Tax reform presents an opportunity to bolster U.S. middle class jobs
It’s a well-known fact that the United States has one of the highest nominal corporate income tax rates among the world’s developed countries—a fact that, in an increasingly global economy, puts us at a competitive disadvantage and incents investment abroad.
The good news is that there is bipartisan support for tax reform that would lower the nominal rate. And since that task will require some rebalancing within the tax code, it presents a parallel opportunity to support another bipartisan goal—strengthening the middle class.
Ever since its inception in 1909, the corporate tax code has been continually adjusted to encourage growth in particular sectors. Over time, this has unbalanced the playing field and created effective tax rates that vary widely from industry to industry. And just as varying nominal tax rates incent investment in certain countries over others, so too do the differences in effective tax rates channel the flow of domestic investment. The industries that benefit are able to grow, hire, and offer better wages.
Through tax reform, policy makers have a window of opportunity to rebalance the field. A code that not only lowers the corporate rate, but also supports investment in industries where middle-class jobs traditionally exist (trucking being one) could firmly shift our economy back into high gear.