In Washington, DC, it can be a challenge for lawmakers to agree on something as simple as the day of the week. Yet, when it comes to an issue as complex as America’s business tax system, leaders from across the ideological spectrum are in agreement: it’s broken.
As co-chairs of the RATE Coalition and former members of Bill Clinton’s and Ronald Reagan’s White House, we are proud to work with companies that employ one-third of the private sector workforce. We have seen first-hand the tremendously positive impact of our members in communities across all 50 states. Right here in North Dakota, we are proud to recognize that RATE Coalition members have created 84,022 jobs.
Our country has the highest corporate tax rate in the world. Recognition of this problem is bipartisan, as is the solution. Showcasing the bipartisan resolve to remedy the rate in advance of President Trump’s visit to the Peace Garden State, Democratic U.S. Senator Heidi Heitkamp is “glad to welcome [him] to North Dakota,” where our tax code is leaving businesses and families “twisting in the wind.”
[mks_pullquote align=”left” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]The simple, yet significant endeavor of lowering our corporate tax rate to a globally competitive level would therefore ensure that our tax code works for us and for American jobs – not against us and for overseas jobs.[/mks_pullquote]
During his remarks last week in Missouri, President Trump noted that the United States has “totally surrendered our competitive edge to other countries” with a combined state and federal corporate tax rate of 39.1%. To put that into perspective, Canada welcomes jobs-creating business owners with a 15% rate on the other side of the North Dakota border. Our tax rate is 10 points higher than the average of our trading partners in the Organization for Economic Cooperation and Development, an international group of the most developed nations. The consequence of the tax rate is costly in terms of jobs and growth and we now have a once in a generation opportunity to reduce it.
In 2013, North Dakota’s GDP was $900 million lower because of Washington’s failure to act. With a -1.23% long-term impact to wages, an average North Dakotan making $50,000 could risk losing out on more than $615 of income per year moving forward. Meanwhile, over time, the state will continue to miss out on billions in revenues to improve schools, local services, and roads. In other words, continuing to kick the tax reform can down the road threatens our ability to fix that very road.
Nationally, our GDP is more than $320 billion lower because of our high corporate tax rate – a marked contrast from what could be with a rate enjoyed by businesses just north of North Dakota. A 2015 simulation conducted by the Tax Foundation’s TAG Model found that our GDP would increase by 4.3%, our economy would gain an additional 613,000 new jobs, and our wages would increase by 3.6% – all if our corporate income tax rate mirrored Canada’s.
The simple, yet significant endeavor of lowering our corporate tax rate to a globally competitive level would therefore ensure that our tax code works for us and for American jobs – not against us and for overseas jobs. It is long past time for our leaders in Washington to enact comprehensive tax reform and deliver that critical win for North Dakota.