A year before the 2012 elections, candidates already are hard at work. From the president on down to the state and local level, candidates are marshaling their resources - money, media, personnel, research and more - to gain an edge with voters.
The competition is tough, much like the competition U.S. business faces in the global marketplace. Another similarity between candidates and companies: They have identified job creation as a top issue for the campaigns of 2011-12, an understandable choice given a national unemployment rate stuck above 9 percent.
But after Election Day, candidates get to take a break from the electoral competition (at least until the next campaign two or four years away). For U.S.-based companies, the global competition never ends. Other national governments and companies relentlessly work together to create attractive, competitive business climates in their countries.
Business Roundtable (BRT) calls on candidates to recognize this global reality when developing their campaign platforms and, once elected, to vote accordingly. An uncompetitive U.S. economy will struggle to generate the economic growth needed to boost private-sector employment.
The United States must respond on all fronts with policies to restructure the U.S. tax system, restrain regulatory excess, expand exports, develop domestic energy resources and promote skills-oriented education. Candidates who embrace those priorities will find broad support from business.
Business Roundtable is an association of more than 200 chief executive officers of leading U.S. companies that produce $6 trillion in annual revenues. BRT-affiliated companies also generate an estimated $420 billion in sales for small- and medium-sized businesses annually.
In December 2010, our member chief executives released Roadmap for Growth, a set of policies to help guide the national economic debate (brt.org/roadmap). Those policies have come to the forefront even more since the report’s release - especially in the area of taxes and regulatory reform. We are at work on a Roadmap II to provide even more details about what’s required to restart the American jobs engine.
Tax reform is one priority. Suffering from the second-highest corporate tax rate of any nation in the Organization for Economic Cooperation and Development (OECD), the U.S. tax system is a major obstacle to domestic investment. Indeed, two decades of rate reductions by America’s competitors have resulted in the U.S. corporate rate being 50 percent greater than the average of other OECD countries.
In addition, the United States is the only member of the Group of Seven without a territorial tax system. Instead, we use a worldwide system that taxes the profits of U.S. companies twice - once when they are generated overseas and again when returned to the United States. As a result, under current tax laws, U.S.-headquartered companies have a substantial incentive to keep and invest profits overseas. That should change.
Bipartisan support exists on Capitol Hill for broadening and lowering the rates. Rep. Dave Camp, Michigan Republican and chairman of the House Ways and Means Committee, recently released a draft discussion document proposing a 25 percent corporate tax rate and a competitive territorial tax system. The Camp proposal is a solid foundation for action.
Tax reform as a 2012 campaign issue will also be shaped by the outcome of the Joint Select Committee on Deficit Reduction, i.e., whether the supercommittee produces the $1.2 trillion to $1.5 trillion in savings set by the Budget Control Act and Congress approves its recommendations.
BRT supports the bipartisan committee’s work as necessary to start the United States on the path to fiscal responsibility. At the same time, the committee must act to promote the economic growth that will produce additional revenues. Tax reform is a key to that desired growth.
The imperative of economic growth also led Business Roundtable’s Roadmap for Growth to stress the ever-increasing burden of federal regulation. The American Action Forum projects 2011’s new regulatory costs to top $100 billion by year’s end. In sectors such as financial services, energy and health care, the looming threat of even more heavy-handed regulation discourages domestic U.S. investment and erodes our competitiveness.
Candidates should first of all acknowledge that regulations can discourage growth and hiring. President Obama already has, instructing executive-branch agencies to focus on their rules’ impact on business and employment. The president also told the Environmental Protection Agency to withdraw its proposed new air-quality standard for ground-level ozone, potentially the most expensive regulation in U.S. history.
BRT also has expanded its Roadmap’s examination of regulation. September saw the release of the “Toward Smarter Regulation” report, which recommended greater transparency and use of cost-benefit analysis to bring balance to federal regulation.