Where's the change behind rhetoric?
Where's the change behind rhetoric?
As the campaign season heats up, I can’t help but notice President Barack Obama is dusting off the same old sweeping rhetoric and speechwriting skills that catapulted the first-term senator to the presidency three years ago. Unfortunately, despite promising us all that “change was coming,” this president has fallen back on his tried-and-true platitudes that are shrouded in anti-business oratory.
The latest proposal is the president’s push for “insourcing American jobs,” which he intends to accomplish via tweaking our convoluted Tax Code by adding new layers of credits, deductions, exemptions and writeoffs. This should come as no surprise, he’s been beating the “shipping our jobs overseas” drum since Sen. Hillary Clinton was the front-runner in Iowa.
This seems great on the surface, but digging a bit deeper, you can see the tax changes he continues to propose actually make our position in a global economy even worse. Not only will any new tax loopholes proposed by the president decrease yearly revenues and add to our debt, but the president’s proposal will do nothing to address the fact that the U.S. currently houses the second-highest business tax rate of any OECD countries, nor the fact that the U.S. remains one of the only countries in the world to tax business earnings on a worldwide level, subjecting it to another level of taxation. Unlike almost all of our major trading partners, we tax our companies on their foreign income when that income is brought back to the United States, even though that income already has been taxed in a foreign country. This discourages our companies from bringing profits back to the U.S. to invest at home.
Rather than developing a tax system that addresses these issues, the president’s proposal panders perfectly into his time-tested rhetoric of demonizing job creators. In reality, his proposal will do nothing to simplify and reform our Tax Code and instead will add another section to more than 70,000 pages of taxes while simultaneously punishing American-based companies that have attempted to earn profits by also selling to the 95 percent of the world’s population that lives outside the United States. While the president pays lip service to simplifying the Tax Code, his recently unveiled budget actually moves in the opposite direction of simplification. His proposals go against the very tenants of tax reform and Tax Code simplification by having in the fiscal 2013 budget at least 24 provisions that either create new targeted tax breaks or expand existing tax breaks such as his new insourcing proposal. This administration simply cannot have it both ways.
What the administration should do is highlight that corporations are making meaningful investments in the U.S. and that there are smart changes we can make to continue to encourage such. In my home district, Caterpillar just spent $200 million in East Peoria, Ill., to modernize production of the track component of its tractors. Additionally, Caterpillar will soon be opening a facility in Texas and another in Georgia that will be doing work that currently is done in Japan. Caterpillar is planning to open more of these facilities nationwide. To be strong in the United States, Caterpillar also has facilities abroad so that it can locate near some of its worldwide customers. A strong Caterpillar abroad helps provide corporate, research, construction, repair and assembly jobs for the company here in the U.S.
To encourage more of these success stories, we should create what our employers truly need: a tax plan that will level the playing field against our global competitors. We need to get in the game to compete with other countries that are putting points on the board and are frankly running up the score. The House Ways and Means Committee, of which I am a member, has begun this process. Last year, we unveiled a proposal to switch to a territorial system of taxation for American-based businesses. We did so by soliciting input from job creators all across this country. Most important, we did so in a way that wouldn’t hurt any current revenues. We will soon unveil ideas for how to also bring down individual tax rates to help Americans of all income levels keep more of their paychecks as well as help the 30 million small businesses that file as “pass through” entities compete in a worldwide economy. But these efforts have been matched against an unwilling president set on spending a year on rhetoric-filled anecdotes and catchy one-liners while ultimately raising taxes on American job creators of all sizes and the American citizens.
We need a president who is willing to level the playing field with our competitors abroad and help make the U.S. once again a place where businesses want to invest, expand, grow and hire, creating more American jobs in the long run. It’s my hope President Obama finally delivers the “change we can believe in” by embracing this proposal to change our Tax Code and create more jobs.
Rep. Aaron Schock (R-Ill.) serves as a member of the House Ways and Means Committee.