[Congressional Record Volume 152, Number 20 (Thursday, February 16, 2006)]
[House]
[Pages H355-H356]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SIMPLIFIED USA TAX
Mr. ENGLISH of Pennsylvania. Mr. Speaker, I ask unanimous consent to
[[Page H356]]
claim the time of the gentleman from North Carolina (Mr. Jones).
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
The SPEAKER pro tempore. Under a previous order of the House, the
gentleman from Pennsylvania (Mr. English) is recognized for 5 minutes.
Mr. ENGLISH of Pennsylvania. Mr. Speaker, today I would like to focus
on an issue that is critical to the survival of America's manufacturing
base and the stabilization of American growth and job creation.
While Washington continues to explore initiatives to restrain
outsourcing and level the playing field for U.S. employers in the
international trading system, it is imperative that we maximize the
Federal Government's most potent economic tool, tax policy, to promote
growth.
In order for U.S. employers and businesses to remain competitive in
the 21st century's global market, Congress must create a Tax Code that
serves as a source of support to American companies rather than as a
hindrance.
I recently introduced legislation, the Simplified USA Tax, or SUSAT,
to help untangle the web of red tape that individual and corporate
taxpayers have to navigate every year. My proposal includes a new and
better way of taxing businesses that will allow them to compete and win
in global markets in a way that exports American-made products, not
American jobs. I have studied this issue and I believe that, if enacted
in America, this innovative approach to business taxation will set the
worldwide standard and create an opportunity for the United States to
thrive.
In fact, many of the provisions included in my bill were recommended
by the President's advisory panel on Federal Tax Reform as part of
their Growth and Investment Initiative.
Under my proposal all businesses, incorporated or not, are taxed
alike at an 8 percent rate on the first $150,000 of profit and at 12
percent on all amounts above that small-business level. Additionally,
all businesses will be allowed a credit of 7.65 percent payroll tax
that they pay under the current law. One of the most pro-growth
elements in SUSAT is that all costs for plant and equipment inventory
in the U.S. will be deductible in the year of purchase.
There is broad-based support for expensing in Washington. Recent data
show that orders for capital goods were on a steady decline from early
2000. However, when Congress passed ``bonus depreciation,'' an
initiative that I worked on with my colleague, Mr. Weller from
Illinois, as part of the 2002 and 2003 tax bills, the trend was
immediately reversed and orders for goods steadily rose.
Every economic principle and every piece of data tells us that
immediate expensing must be a major component of any tax reform
package. It has the highest bang for the buck, about $9 of growth for
every $1 of tax cut. It has bipartisan appeal, and it directly
translates into greater competitiveness and better paying jobs.
Another key component of SUSAT which will make American businesses
more competitive is border adjustability. SUSAT would end the perverse
practice, unique among our trading partners, of taxing our own exports.
The absence of some type of border tax adjustments for exports of
American-made goods places our businesses, particularly manufacturers,
at a major disadvantage.
Any entrepreneur will tell you that whether a product is taxed at the
corporate level or through a consumption tax paid at the register, the
burden will fall largely on businesses, which includes the employees
and shareholders. So when our trading partners rebate the taxes paid to
their businesses and we do not, it necessarily means that we are at a
disadvantage.
Under SUSAT, all export sales income is exempt and imports are taxed
at a 12 percent rate. In turn, all companies that produce abroad and
sell back into U.S. markets will be required to bear the same tax
burden as companies that produce and sell from here in the United
States. This policy will finally take away the bias in favor of imports
built into our current tax structure, which, in my view, has
contributed to our record trade deficit, which continues to increase at
a breath-taking rate.
Mr. Speaker, we noticed that on Monday the WTO rejected an appeal of
an early ruling which found transition rules repealing the export
subsidy known as FSC/ETI. This decision requires us to come back and
look again at fundamental reform. Not only are our products at a
disadvantage in the global marketplace; the EU now has a legal right to
impose sanctions on American products, giving them an even greater
competitive disadvantage. Monday's decision makes tax reform even more
timely and even more essential.
The other underlying absurdity in our Tax Code is that we currently
condition territoriality on foreign subsidiaries reinvesting profits in
foreign countries instead of repatriating the profits for investment in
the United States. I authored a provision with Senator Ensign that made
it into the tax law that effectively allowed the repatriation of over
$300 billion in foreign profits that have come back into the United
States and have been reinvested into our homeland.
Anyone who has any doubts that U.S. companies have an incentive to
keep money abroad has just to look at those figures. Until we change
our current structure, the foreign companies will continue to reap the
economic benefits of our tax laws' backwards incentives.
The time has come for us to move forward on fundamental tax reform,
and I challenge my colleagues in the House and on the Ways and Means
Committee to move forward on this issue to engage the Treasury. At a
time when we need to make sure we are doing everything to make our
economy competitive, now is the time to move forward on tax reform.
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