Go to PDF Version | Go to Recent Issues
To save time in the future, you may select one of the preferences below. You may update your eIBD preferences at any time by going into My IBD and selecting Update Your eIBD Preferences.
Set Web-Based Version as Default Set PDF Version as Default Set Recent Issues as Default
Get QuoteSearch Site
Daily Graphs Online
America's tax system needs an overhaul. It is too complex. Many provisions are unreliably temporary. Even rules that work as intended have been branded as loopholes.
And the system is clearly uncompetitive, as shown by both our outdated worldwide system, which double-taxes American companies, and our corporate rate, now the highest in the developed world.
The current administration deserves credit for releasing its recent tax reform document, "The President's Framework for Business Tax Reform," which recognizes the macroeconomic potential of lowering corporate rates.
Unfortunately, the president's proposals did not acknowledge how our worldwide tax system — imposing U.S. taxes on top of foreign taxes on sales made somewhere else — disadvantages American companies and undermines a more robust economic recovery.
Consider, for example, Otis Elevator Co., one of United Technologies' flagship businesses. The elevator industry is a case study in the realities of globalization and the negative impacts of an unlevel tax playing field. In 2011, 15,000 elevators were sold in the United States. By contrast, 380,000 were sold in China.
To compete for business in the large Chinese market, Otis must be physically present there. Proximity to building sites boosts sales, helps control transportation costs and enables just-in-time delivery. A local presence is also crucial in winning maintenance contracts — you can't service an elevator in Hangzhou from Hartford.
In addition, although elevators have been around for more than 150 years, innovation remains essential. Otis continues to engineer new technology, such as a regenerative drive that returns energy to the grid as elevators descend. The resulting advanced engineering activity and intellectual property reside largely in the U.S. Keeping that high-value work here is highly dependent on Otis' success around the world.
The link between Otis' global operations and its success as an American enterprise illustrates why U.S. tax reform must address international competitiveness. In a market where over 600,000 elevator units are sold every year, Otis is the only U.S.-based player left.
Our competitors hail from countries that have adopted territorial tax systems and lowered their rates. The inequity that companies such as Otis are taxed twice, while their competitors are taxed only at the point of sale, could be remedied if Washington adopted a territorial tax system.
This much needed reform has been advocated by the Simpson-Bowles Commission, the President's Export Council, the chairman of the Committee on Ways and Means, and other prominent congressional and business leaders. Moreover, America is alone among G-8 nations in maintaining its long-arm taxation of homegrown companies.
There is a modern parallel to Obama's new campaign slogan, "Forward!" It is the motto of the modern Socialist Movement "Forward!" (translated: "Vperiod!"), founded in Russia in 2005. Its declared goal is the socialist transformation of society. IBD Exclusive Series:Perspectives of a Russian ...
Since the financial crisis and throughout the sluggish economic recovery, working families and small-business owners have watched as the federal government has engaged in a grand experiment in government-led economic engineering. That experiment has failed. The latest jobs report underscores the ...
When Admiral Mike Mullen, former chairman of the Joint Chiefs of Staff, said our debt — not al-Qaida or China — is "our biggest national security threat," it should have been a wake-up call for every policymaker in Washington. Yet, since Mullen made that statement in 2010 Washington has ...
Amid outrages like an $800,000-plus party scandal at the General Services Administration, the Secret Service prostitute scandal and a recent Medicare fraud bust that netted 107 people scamming Medicare out of $450 million, what does President Obama want to do? Why, spend $52 million in taxpayer ...
Is the European Union going to last? With Francoise Hollande as the new French president, and the Greeks massively voting for extreme parties — real communists and Nazis — the entire European project is called into question. The fruits of the European crisis are acrid indeed. The more ...
Register
Don't marry a stock, date it.
Get QuoteSearch Site
Read Full Article »
