US Organisations' Critique Of Bill Thomas's Tax Proposals

Tax-News.com, Washington

30 August 2002

The Center for Freedom and Prosperity, along with more than 30 of the largest and most influential free-market groups in the US, has written to Rep. Bill Thomas, Chairman of the House Ways and Means Committee, applauding him for trying to fix the provisions of the tax code that make it difficult for US-based companies to compete in international markets. But the letter, sent to the Chairman yesterday, also urges Chairman Thomas to reconsider two of the major provisions in his bill (H.R.
5095) to simplify international taxes -- the punitive inversion moratorium and the tax increase on foreign-based companies that invest in the US economy.

The letter to Chairman Thomas states: “We applaud you for trying to fix the provisions of the tax code that make it difficult for U.S.-based companies to compete in international markets. Indeed, we strongly agree with the language from the summary accompanying your bill: ‘The United States Tax Code is one of the most complex in the world. The inequities and burdens that our tax system imposes on US companies, particularly those operating in international markets, are greater than those imposed by most other nations.’”

While Chairman Thomas’s proposal was well received, the Coalition was unsympathetic to a couple of provisions in the legislation. The letter notes: “Most of the provisions in H.R. 5095 make our tax system better. We hope, however, that you will reconsider the punitive inversion moratorium and the tax increase on foreign-based companies. We look forward to working with you to make America’s tax code more competitive.”

Andrew F. Quinlan, President, Center for Freedom and Prosperity said: “Bill Thomas’s bill is a good first step. The Center for Freedom and Prosperity supports his effort to simplify international taxes and make the U.S. tax code more competitive. We also urge the Chairman to reconsider a few provisions. In particular, punishing companies, shareholders, consumers and taxpayers is not the way to stop corporate inversions. We must change or tax code and make the U.S. more hospitable for multinationals. Our international tax code is not competitive and inversions are the symptom, not the problem.”

Daniel Mitchell, Senior Fellow, The Heritage Foundation said: “The corporate tax code is a major impediment to American companies competing in world markets. The U.S. corporate tax rate is the fourth highest in the developed world and the imposition of those high tax rates on foreign-source income creates a huge advantage for companies based in other nations. Chairman Thomas correctly understands that tax reform will create a more level playing field for U.S.-based companies and that this will be good news for American workers and American consumers.”

Veronique de Rugy, Fiscal Policy Analyst, The Cato Institute, said: “The United States should have a territorial tax system – the common sense notion that governments only taxes income earned inside national borders. The Thomas legislation is a small but important step in that direction. But the bill could be improved by dropping the inversion moratorium, a provision that is best characterized as fiscal protectionism.”

Grover Norquist, President, Americans for Tax Reform, said: "I applaud Chairman Thomas's first step towards reforming our complex and burdensome tax code. For the United States to remain a leader in the global economy, our international taxes must remain competitive with other nations. Yet, much more needs to be done on this issue and I look forward to creating a more pro-growth tax code."

Eric V. Schlecht, Director of Congressional Relations, National Taxpayers Union, said: “Rather than heed the reactionary calls from some to enact further punitive
laws that would worsen American corporations’ competitive disadvantage in the global market, Chairman Thomas has wisely chosen to address the complexity and inequities that currently pollute U.S. tax policy. It is our hope that this bill represents but a first step in the continuing effort to reform our tax code.”

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