As the New York Analysis of Policy & Government recently reported, American manufacturing remains in a state of crisis, with less employment in that crucial sector of the economy now than at the start of the Obama presidency. The impact of that issue on the U.S. trade balance is severe.
The most recent releases of the U.S. Census Bureau and the U.S. Bureau of Economic Analysis indicate a worsening of the trade deficit, with the deficit increasing by a very significant $15.5 billion in the latest survey. Year-to-date, the goods and services deficit increased $6.4 billion, or 5.2 percent, from the same period in 2014. Exports decreased $11.7 billion or 2.0 percent. Imports decreased $5.3 billion or 0.8 percent.
The impact of adverse government actions concerning manufacturing is substantially responsible, although almost all sectors of the economy have been affected. The Heritage Foundation’s latest “Index of Economic Freedom” noted that “substantial expansion in the size and scope of government, including through new and costly regulations in areas like finance and health care, has contributed significantly to the erosion of U.S. economic freedom. The growth of government has been accompanied by increasing cronyism that has undermined the rule of law…”
Tax rates play a key role. The National Association of Manufacturers has released a study, “The United States needs a more competitive corporate tax system,” which clearly outlines the problem.
A summary of the report:
The personal information of the customers is kept confidential. viagra cheapest online davidfraymusic.com The sperms of patients with chronic prostatitis tend levitra from canada to show low motility and high mortality. Normal human reproductive health is a common generic cialis professional example of these inhibitors and have been found to be truly effective against erection problems and also provide many health benefits like: Gives deep relaxation to physical and mental health and releases stress and tension. Men with Peyronie’s disease must consult the doctor before taking this pill. buy line viagra “The United States holds the unenviable position of having a higher statutory corporate tax rate than any of our major trading partners—and all OECD [The Organization for Economic Cooperation and Development] countries. Among 135 nations, the U.S. rate is exceeded only by the United Arab Emirates. While skeptics point to the array of provisions that allow a reduction below the topline statutory rate, many ignore the additional burden created by state and local taxes.
“It is abundantly clear that, when compared to the rest of the developed world, the U.S. rate is out of step at best and uncompetitive at worst. The current global tax system in the United States puts manufacturing firms at a disadvantage inside and outside foreign countries. The current global tax system in the United States puts manufacturing firms at a disadvantage inside and outside foreign countries. If the United States converted to a territorial system as part of comprehensive tax reform, it would remove the current barrier to corporate repatriations (transfers in foreign subsidiaries’ profits to U.S. parent companies), promoting a marked rise in domestic investment. The profits of C corporations (entities taxed separately from their shareholders) are taxed once at the corporate level at the corporate income tax rate and again when the after-tax profit is distributed back to shareholders at personal income tax rates. The already high corporate tax rate, coupled with double taxation of dividends and capital gains, reduces economic efficiency by discouraging capital formation and broader economic growth.
“Currently, the United States is the only country in the G-7 that taxes the active foreign earnings of its companies worldwide. Only four other OECD countries have a worldwide system—Chile, Ireland, South Korea and Mexico. The other 29 have a territorial tax system in which business income earned abroad by foreign subsidiaries is wholly or partially exempt from home country tax. Again, the United States fails to respond to global trends. Fourteen of 34 OECD member countries had a territorial tax system in 2000, increasing to 23 in 2005 and 29 in 2014…
“The Tax Foundation maintains an international tax competitiveness index for the 34 OECD countries. Key principles of tax policy examined in the rating system are the competitiveness of the tax code, its neutrality between consumption and savings and whether it favors one industry over another. On all counts, the United States scores poorly, placing 32 out of 34 in the 2014 index. As outlined above, U.S. corporate tax rates, both statutory and marginal effective, are higher than tax rates in our major trading partners, making it harder for U.S. companies to compete in the global marketplace. Similarly, the U.S. worldwide tax system, an outlier when compared to tax systems in most other developed countries, puts U.S. global companies at a competitive disadvantage vis-à-vis their competitors outside the United States. Converting from a global to a territorial tax system would make U.S. rules more internationally competitive and unlock an estimated $2.1 trillion in stranded profits held abroad by U.S. multinationals. Our tax code is also biased, favoring consumption over saving (through high capital gains and dividends taxes, high estate taxes and high progressive income taxes). Furthermore, double taxation of corporate profits discourages firms from electing the C corporation structure that has wider access to capital markets.”
The continuing problems of slow-to-no growth, and high unemployment particularly in middle-class jobs could be resolved by a lessening of the heavy hand of government in areas such as business regulation and taxation. It is a step urgently required by the American economy.