Senator David Perdue: Eliminating Repatriation Tax A Necessity For Global Competitiveness
WASHINGTON, D.C. – Yesterday, U.S. Senator David Perdue (R-GA) spoke on the Senate floor about Washington’s outdated tax code and called on the Senate to act now and grow the economy by eliminating the repatriation tax.
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“I rise today to speak about seizing the opportunity to drive real economic growth right now, but first, I'd like to give a little context by referencing our great nation’s desperate fiscal condition.
Decades of overspending by both parties and mismanagement by both parties have led to a crushing 18 trillion dollars of federal debt. Even more sobering to me is the upcoming 100 trillion dollars of future unfunded liabilities coming at us like a freight train.
We have a fiscal crisis in this country, everybody can see it. People back home can feel it.
As an outsider, my role is to bring a new sense of urgency to Washington to help solve this fiscal crisis. While I'm encouraged by the work my colleagues on the Budget Committee completed this year—we completed a balanced budget for the first time since 2001—it was merely a good first step in the right direction. But, we've got a lot of heavy lifting to do.
We must act right now to get our fiscal house in order before it's too late.
Yes, we must cut unnecessary spending. Yes, there are redundant agencies and programs that should be eliminated. And yes, we do need to have a national dialogue on how we keep the commitments that were made to our seniors while saving those important programs for future generations.
However, discretionary spending cuts and long-term reforms to mandatory programs alone will not solve this problem. The numbers just simply don't add up to solve this crisis. Economic growth is really the only answer.
Economic growth supports good-paying jobs across the entire country, and economic growth eventually means more revenue for the federal government without raising taxes.
If we were ever going to get out of the hole that Washington has dug for our country, we're going to have to grow our way out of it economically.
One of the biggest opportunities to infuse energy and investment into our economy right now is before us as I speak, just waiting for us to act on it.
There are approximately 2.1 trillion dollars in corporate profits of American multinational companies sitting abroad, trapped by our archaic tax laws.
Imagine if we could lure just a portion of that back in terms of capital investment in our economy. The multiplier effect alone could be incredible as it rippled its way throughout our domestic economy.
In recent weeks, we've heard a lot of talk about how we in Washington can get those overseas earnings repatriated back to the United States economy. For me the solution is quite simple. We simply eliminate the barrier to repatriation by completely eliminating the tax on repatriation.
My approach isn't just based on my business career. It's not just based on my desire to give our economy a needed shot in the arm. Completely eliminating this tax on repatriation is an absolute necessity for global competitiveness and to create a level playing field with the rest of the world.
I rarely compare other countries to the United States. For simple reasons: number one, we have an 18 trillion dollar economy; number two, we're the innovator in the world; number three, we have the rule of law; and number four, we have really a very dynamic and diverse economy. Very few countries compare to that. But this is one time where a comparison is warranted because it's about how we compete for economic development and jobs with the rest of the world.
A company headquartered in the United States not only has to pay taxes in every single country in which it does business, but when it elects to bring back the remaining profits from abroad, that corporation is forced to pay an additional tax, a repatriation tax.
This doesn't happen if the corporation is based in Canada, France, Germany, the United Kingdom, Australia, Japan, or indeed, the remainder of the 39 OECD countries. In fact, there is only one country in the list of 39 OECD countries that has a repatriation tax: the United States.
The United Kingdom actually eliminated their repatriation tax in 2009 and over the last decade have reduced their corporate tax from 28 percent to 18 percent.
We continue to see companies leave the United States because the they can go pretty much anywhere else and benefit from much lower tax rates than here in America.
We've seen a rash of those inversions over the last few years and it's not going to stop until we deal with the underlying problem and that is our corporate tax rate is not competitive with the rest of the world. The repatriation tax is a derivative of that primary causal problem.
What I'm talking about today is simply the elimination of the repatriation tax but sooner or later, we have to deal with the fact that our corporate tax rate is simply not competitive.
The question simply before us is do we want multinational companies, in many cases iconic American brands, to continue to call the United States home or not?
As a former CEO of a large branded company that manufactured in dozens of countries and sold in dozens more, I have firsthand experience, and I can tell you that based on that experience we are losing our competitive advantages with the rest of the world.
In fact, I see us now at a growing disadvantage for our American companies to compete with companies in other countries. The hostile regulatory environment the (Obama) Administration has created is killing American jobs and our outdated tax system is forcing them to expand abroad. Executive orders and regulatory mandates have created a punitive atmosphere in which to try to grow businesses or start businesses here in the United States.
Unfortunately, in typical Washington fashion, the dialogue on repatriation is focused on how to get a short-term solution, a short-term federal tax increase instead of using repatriation as a tool to grow the economy and make us more competitive.
In my estimate, this kind of thinking is dead wrong and another example of how we got in this mess in the first place.
We should not be looking at repatriation as a way to pay for the Highway Trust Fund or any other short-term solution to Washington’s spending problems for that matter. That kind of shortsighted thinking will only make our fiscal situation worse. It will only cause more American companies to look for a new home.
Repatriation is a big idea, with a big potential impact for our economy.
If we encourage repatriation the right way, it means sustained growth for our economy, it means more American jobs and innovation. And, ultimately it means an organic increase in federal tax revenues based on pure economic growth.
This growth can allow us to deal with our economic and fiscal priorities, and finally develop a long-term plan to begin to pay down our overburdened debt.
Before I conclude, I have one final thought. I hope this thought will compel my colleagues to act with a sense of urgency on this issue and others that impact our economy.
We actually have fewer people working than at any time in the last 30 years. When I go back home, the number-one question that is put before me is, how can I get my hours up? How can I get more work? People back home know we have a crisis. It's not just bureaucrats in Washington looking for a few more tax dollars so we can make government bigger.
This is about putting people back to work. Helping us compete against the growing economies of China, India, Russia, and other rivals of today's world.
The approval rating of Congress today is somewhere in the mid-single digits and that’s only because our mothers voted. I believe it’s because this town's priorities are not aligned with those of the people who sent us here for their bidding.
Folks back home know that shortsighted, short-term solutions to big problems is how Washington got in this mess in the first place. So today we can continue to argue about temporary ways to pay for trust funds that are going bankrupt every few weeks, or we can simply finally get serious about solving this systemic problem before we have to hand it to our children and our children's children.
I know the American people expect the latter. In fact, they're demanding it. That can happen, but we must make real tax reforms right now that will set us on a new course for economic growth and opportunity for generations to come.
The time for serious debate about repatriation has come. We have an opportunity. I implore my colleagues in the Senate to debate this earnestly and let’s move on this right now and put people back to work, make America more competitive for our children and our children's children.”
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