Reducing Taxes for a Simpler System
Establishing a flatter, fairer tax system will encourage investment and innovationDownload Talking Points
The U.S. tax code is confusing and complex. The United States has one of the highest corporate tax rates in the world and the rates many American small businesses pay are also comparatively high. U.S. job creators also face high tax compliance burdens. According to the Tax Foundation, in 2016, (the latest year data is available), it took Americans 8.9 billion hours to prepare and file their tax returns, imposing a $409 billion cost on the U.S. economy. Business taxes took up about four million hours as a cost of nearly $200 billion. Leaders in Washington must reduce the overall tax and compliance burden and establish a simpler, flatter and fairer system that will encourage investment and innovation. They must also avoid passing piecemeal, temporary tax plans that breed uncertainty and cause employers to put off decisions about expanding their business or hiring more workers.
Why it Matters
The United States is burdened with a large national debt, persistent annual federal budget deficits and unsustainable entitlement programs. Raising taxes will not solve these problems and will only make it harder for U.S. companies to create jobs, invest in expanding their business, provide quality employee benefits and compete against their global counterparts. Establishing more competitive tax rates for small businesses, corporations and individuals will make the United States a more attractive place to invest, live and work. A stable, fairer tax system that encourages risk and investment will spur greater economic growth, which will produce higher revenues for the federal government.
Policymakers must –
- Ensure a globally competitive North American manufacturing industry by reducing, not increasing, the tax burden on members of the U.S. metals industry.
- Ensure the 28 million businesses that pay their federal taxes through the individual income tax code are treated equitably and fairly by passing comprehensive, not corporate-only, tax reform.
- Ensure the tax code does not benefit certain individuals, businesses or industries over others.
- Allow U.S. companies that have a global footprint to bring back their overseas profits without double taxation.
- Put in place permanent policies that foster certainty and avoid temporary fixes that breed business and individual taxpayer anxiety
Communications from MSCI:
Coalitions and Partners:
Related Issues Important to the Industrial Metals Supply Chain
Comprehensive vs. Corporate-Only Tax Reform
The vast majority of U.S. businesses (more than 90 percent) file their federal income taxes through the individual, rather than corporate, tax code. The 2017 Tax Cuts and Jobs Act reduced income taxes for C-Corporations, pass-through entities, and individuals and families, but only the corporate rate cut was permanent. When the income tax reductions for pass-through entities expire these companies will be at a competitive disadvantage with their global counterparts as well as U.S. C-Corporations.
Over the last several years, members of both political parties have proposed repealing the last-in, first-out (LIFO) accounting principle as a means to raise revenue to “pay for” tax reform or increased spending. While LIFO repeal was not part of 2017’s Tax Cuts and Jobs Act, the Metals Service Center Institute believes lawmakers will continue to consider it as a “revenue raiser” when they need additional funding for other programs. Repealing LIFO could devastate many of MSCI’s member companies. According to the Congressional Budget Office, LIFO repeal would increase taxes on U.S. businesses by $102 billion over 10 years. Several MSCI members have said LIFO repeal could very well put them out of business.