Tax Day is quickly approaching, which means that the absurdity of America\u2019s corporate tax rate is on full display.<\/p>\n
At 35 percent, our corporate tax rate is the highest among developed countries. The Land of the Free has a higher corporate tax rate than socialist-run France. This is partially because corporations in this country are looked down upon when, in reality, it\u2019s corporations that play a large role in the creation and flourishing of the middle class.<\/p>\n
Corporations like CaptiveAire, a manufacturer of commercial kitchen ventilation equipment I founded in 1976 in Raleigh, make an easy target for misguided activists. We have experienced strong financial growth over the years, and it seems to some that we reap too much.<\/p>\n
However, what many forget is that our profits are used to invest in new equipment and technologies, increasing value for users and creating new jobs. Recently, we opened our sixth U.S. manufacturing plant and created 50 jobs. We also expanded our service and sales departments, hiring 32 service techs and sales engineers, and we still have trouble keeping up with demand.<\/p>\n
Yes, we are a high-growth company, and, yes, we collect the financial rewards, but more importantly we use these results to create American jobs, and many of them. Money earned by the private sector supports job expansion and real income growth for the middle class.<\/p>\n
But truth be told, it\u2019s not easy. America\u2019s corporate tax code is tough on corporations \u2013 and the nation\u2019s workers. America\u2019s high corporate tax rate leads many companies to invest their money elsewhere. When that happens, job opportunities, real wages and economic growth in our country decline \u2013 disproportionately hurting the middle class.<\/p>\n
Other nations have realized this and addressed their high corporate tax rates \u2013 Japan, Canada and Britain are prime examples \u2013 and have reaped economic benefits from doing so. This has left America alone as an outlier, meaning that companies park their profits elsewhere rather than bring them home to improve our economic and fiscal situation.<\/p>\n
The United States should have a model tax system that attracts companies and entices them to place their headquarters here. Instead, we have a tax code that\u2019s unduly burdensome and filled with loopholes \u2013 forcing corporations like CaptiveAire to spend resources on accounting when the resources could be going back into employees\u2019 pockets. We are not alone. General Electric employs over 1,000 tax lawyers to contend with the complicated tax code.<\/p>\n
As a consequence of the status quo, we wind up with \u201ctax inversions\u201d \u2013 a technical term to describe a company\u2019s decision to take advantage of lower tax rates in a foreign country by basing its headquarters there. Hit especially hard when this swap takes place are the good-paying jobs at corporate headquarters and the additional jobs they support. Cutting the corporate tax rate would keep more good jobs at home.<\/p>\n
This is necessary despite a positive trend in the top-line unemployment rate. What that figure doesn\u2019t tell you is that more than 7 million Americans on net have actually left the workforce over the past six years, and the labor force participation rate \u2013 a key measure of Americans\u2019 engagement in the workforce \u2013 is at 62.7 percent, the lowest level since 1978.<\/p>\n