On Tuesday House Speaker Paul Ryan, speaking at the National Association of Manufacturers, reiterated his call for the need for tax reform. Tax reform is urgent because the gap in corporate tax rates between the United States and our competitors is wide and increasing.
Ryan told the audience that “as the world changed, our tax code has remained stuck in neutral. It has ballooned to 70,000 pages of rules and regulations that few people today actually understand. There is an old line about this: our tax code is about five times as long as the Bible, but with none of the Good News.”
Ryan is right. The average tax rate of businesses in Organization for Economic Cooperation and Development countries is 25%, compared to 35% for the United States. Canada’s corporate tax rate is 15%. This means that our companies have an incentive to invert their ownership—to be owned by foreign companies.For example, Burger King, the fast food chain, merged with Canada’s Tim Horton’s, a doughnut chain, in order to access Canada’s lower taxes.
Ryan told the audience that “as the world changed, our tax code has remained stuck in neutral. It has ballooned to 70,000 pages of rules and regulations that few people today actually understand. There is an old line about this: our tax code is about five times as long as the Bible, but with none of the Good News.”
Ryan is right. The average tax rate of businesses in Organization for Economic Cooperation and Development countries is 25%, compared to 35% for the United States. Canada’s corporate tax rate is 15%. This means that our companies have an incentive to invert their ownership—to be owned by foreign companies.For example, Burger King, the fast food chain, merged with Canada’s Tim Horton’s, a doughnut chain, in order to access Canada’s lower taxes.