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US Business Urges Deficit Panel To Study Tax Reform

by Leroy Baker, Tax-News.com, New York

19 August 2011


The United States Chamber of Commerce (USCC) has sent a letter to the twelve members of the Joint Select Committee on Deficit Reduction, urging them to reform entitlement spending and overhaul the country’s tax code.

In the letter, the USCC points out that, while recently-passed legislation agreeing to raise the US debt ceiling designated USD917bn in spending cuts and empowered the Joint Select Committee on Deficit Reduction to formulate a plan to reduce the aggregate deficit over the next decade by a further USD1.5 trillion, deficit reduction of that magnitude would not be sufficient.

It would not, the USCC stresses, “stabilize the debt to GDP ratio and would not put this ratio on a downward trajectory; and it would fall far short of achieving a balanced budget. It alone would likely not prevent future downgrades to the debt rating of the United States. Even with successful implementation, the amount of publicly held debt outstanding by the United States would rise to USD16 trillion at the end of 10 years.”

The USCC therefore urges the Joint Select Committee to address these issues by engaging in a true reform of entitlement programmes, without excluding Medicare, Medicaid, and Social Security, and a complete restructuring of the US tax code.

The current tax code, the USCC believes, “needs a comprehensive reform to lower overall marginal tax rates, to encourage saving and investment, to foster global competitiveness, increase capital accumulation, attract foreign investment, and drive job creation".

Further, it adds that “changes to the tax code should not single out specific industries or individuals for punishment, and should allow the marketplace, and not the tax system, to allocate resources,” and that “comprehensive tax reform should include realistic transition rules to provide adequate time for implementation and help minimize economic dislocations individuals and businesses may encounter in transitioning to the new tax system.”

TAGS: tax | economics | business | budget | corporation tax | United States | tax reform

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