Help U.S. Companies Compete Globally with New Tax Code

Help U.S. Companies Compete Globally with New Tax Code
December 1, 2003


October 10, 2003



The Honorable William Thomas

Chairman

Committee on Ways and Means

United States House of Representatives

1102 Longworth House Office Building

Washington, DC 20515



Dear Chairman Thomas:

By taxing income earned in other nations and imposing high tax rates, the current United States tax system violates important principles of good tax policy. These anti-growth features undermine the economy’s performance and hinder the ability of American firms to compete in the global economy. More specifically, the tax code unduly raises the cost of capital for U.S. firms trying to invest, taxes profits at a rate far higher than do our trading partners, and is littered with complex rules that often result in double taxation of foreign income while many countries do not tax active foreign income at all.

We are writing to commend you for seeking to reform the tax treatment of international business income. Your proposed legislation, H.R. 2896, the “American Jobs Creation Act of 2003,” takes important, fundamental steps towards a territorial, consumption-based tax system. This will improve the competitiveness of the U.S. tax code and help create a level playing field for U.S.-based companies. These changes will allow U.S. firms to expand both domestically and internationally and will increase U.S. employment.

In addition, we would like to recognize important provisions in your bill that lower the cost of capital, encourage investment, and make another step forward towards a neutral, progrowth tax code. Specifically, reducing the depreciation lives for equipment is a commendable step forward in the quest for a consumption-based tax system that allows investment to be immediately expensed.

Although we are disappointed that the World Trade Organization (WTO) and the European Union are attempting to dictate U.S. tax law, we believe that enacting H.R. 2896 will result in a tax code that better promotes U.S. business both within the U.S. and abroad. Such changes will result in greater productivity, output, and employment.



Sincerely,

Glenn Hubbard

Columbia University

Kevin Hassett

American Enterprise Institute

Daniel Mitchell

The Heritage Foundation

Veronique de Rugy

Cato Institute

Richard Rahn

Discovery Institute

Charles Calomiris

Columbia University

Richard Vedder

Ohio University

Deepak Lal

University of California, Los Angeles

Anna J. Schwartz

National Bureau of Economic Research

Ryan C. Amacher

University of Texas at Arlington

Charles W. Baird

California State University

Don Booth

Chapman University

Thomas E. Borcherding

Claremont Graduate University

Charles H. Breeden

Marquette University

Wayne Brough

Citizens for a Sound Economy

Boyd Collier

Tarleton State University

Nicholas Eberstadt

American Enterprise Institute

Kenneth G. Elzinga

University of Virginia

Eric Engen

American Enterprise Institute

Stephen J. Entin

Institute for Research on the Economics of Taxation

Edward W. Erickson

North Carolina State University

Frank Falero

University of California, Bakersfield

Peter Ferrara

International Center for Law and Economics

Fred Foldvary

Santa Clara University

Micah Frankel

California State University

David E.R. Gay

University of Arkansas

Paul Y. Hammond

University of Pittsburgh

Robert Haywood

World Economic Processing Zone Association

Randall Holcombe

Florida State University

Matt Kibbe

Citizens for a Sound Economy

Robert Krol

California State University, Northridge

Edward J. López

University of North Texas

Yuri N. Maltsev

Carthage College

Michael L. Marlow

Cal Poly, San Luis Obispo

Roger E. Meiners

University of Texas-Arlington

Harry Messenheimer

Rio Grande Foundation

Mark J. Perry

University of Michigan-Flint

William H. Peterson

The Heritage Foundation

Barry Poulson

University of Colorado at Boulder

Jan Prybyla

The Pennsylvania State University (Emeritus)

Don Racheter

Public Interest Institute

George Reisman

Pepperdine University

Tim Roth

University of Texas at El Paso

James Roumasset

University of Hawaii

Paul H. Rubin

Emory University

S. Fred Singer

University of Virginia (Emeritus)

Richard H. Timberlake, Jr.

University of Georgia, retired

John T. Warner

Clemson University

Gary Wolfram

Hillsdale College