[Congressional Record (Bound Edition), Volume 153 (2007), Part 15]
[Senate]
[Page 20987]
[From the U.S. Government Publishing Office, www.gpo.gov]


                          TREASURY CONFERENCE

  Mr. SMITH. Mr. President, I rise today to commend Treasury Secretary 
Paulson and his staff at the Treasury Department for convening the 
Treasury Conference on Business Taxation and Global Taxation. The 
purpose of this conference is to examine ways our current business tax 
system affects economic growth, job creation, and competitiveness. This 
is a very important issue that requires our immediate attention.
  Today American companies compete in a global market. In the 1960s, 
trade in goods to and from the United States represented just over 6 
percent of GDP. Today, it represents over 20 percent of GDP, a 
threefold increase. The U.S. role in the global economy also is quite 
different. Forty years ago, the United States was dominant, accounting 
for over half of all multinational investment in the world. Yet, today 
the United States economy represents 20 percent of global GDP.
  However, our Tax Code has not kept up with the globalization of the 
U.S. economy. The rules are outdated and penalize U.S. economic 
interests by hindering American businesses' ability to effectively 
compete in our global economy.
  The most significant demonstration of our Tax Code's inadequacies is 
the corporate tax rate. As Treasury stated in its conference materials, 
since 1980, the United States has gone from a high corporate tax-rate 
country to a low-rate country and back again to a high-rate country 
today. According to research done by the Tax Foundation, the United 
States has the second highest corporate tax rate in the OECD. The only 
country with a higher corporate tax rate is Japan. The U.S. corporate 
tax rate is higher than the rate in all European Union countries.
  Furthermore, the United States is one of only two OECD countries that 
has not reduced rates since 1994--and one of only six OECD countries 
that have not reduced rates since 2000. According to KPMG, the average 
corporate tax rate in the European Union has fallen from 38 percent in 
1996 to 24 percent in 2007. The United States has an average corporate 
tax rate of about 39 percent, including State level corporate taxes. 
The U.S. rate has not dropped recently. In fact, the last time Congress 
acted on the corporate tax rate, we actually raised it.
  According to a recent Treasury study, a country with a tax rate 1 
percentage point lower than another country's attracts 3 percent more 
capital. Therefore, this international trend of lower corporate tax 
rates is not surprising, and it is critical that the United States 
follow suit.
  A high corporate tax rate is not good for American businesses--or our 
economy. A high rate deters corporate investment in the United States. 
It also incentivizes companies to shift their profits to lower tax 
jurisdictions. To attract businesses and profits to America, we need to 
lower our corporate tax rate.
  This fall I plan to introduce legislation that will lower our 
corporate tax rate. I look forward to working with the administration 
and Congress in enacting this important reform. And I once again 
applaud the Treasury Department for examining our broken corporate tax 
code.

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