Last week, Congressman Ron Kind (D-WI) introduced a bill that would lower the effective taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. rate for manufacturers to 20 percent.
According to Kind, “reducing the effective tax rate will be a great boost for American workers and our manufacturers that are competing in the 21st century market. It will help them keep facilities here in the United States and employ American workers making high-quality products. This is commonsense investment in America’s future.”
No doubt, lowering the effective tax for manufacturers will boost job creation, wages, and improve this industry’s competiveness. Certainly all positive things.
But why stop with manufacturing?
If the benefits of lower rates are so obvious for one sector, why wouldn’t the same hold true for all sectors? Imagine all the new jobs, higher wages, and economic growth if we were to extend lower tax burdens to all businesses.
Currently, our corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. rate is the highest in the OECD at 39.2 percent. Small businesses, which are taxed under the individual code, pay an even higher rate of more than 43 percent. These rates far exceed our global competitors’ rates, harm America’s economic growth and stifles U.S. global competitiveness.
It is not just the manufacturers that need relief from high tax burdens. All businesses would benefit from a reduction in their effective corporate tax rate.
Comprehensive tax reform should be more than just targeted tax reductions for particular industries. Real reform should benefit everyone, manufacturer or not.
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