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Proceedings of a Seminar on Rebuilding the U.S. Industrial Base: The Role of Tax Policy in Economic Growth

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The title of this seminar, “Rebuilding the U .S. Industrial Base: The Role of 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. Policy and Economic Growth,” reflects the current concern over how our federal tax code impacts corporate strength and economic growth. Too often over the past decade, we have seen major tax policy changes which were implemented simply as quick-fix revenue raises. These were done without proper analysis or proper debate as to what their economic consequences would be — what they would do to America’s competitiveness. These are the issues examined in the proceedings of our May 22, 1991 seminar.

We brought together a group of leading experts from business, government, and academia to objectively examine how our current tax policies are impacting economic growth and what policies would be necessary to form a pro-growth tax policy for the long term. Their comments and conclusions point to the need for significant reforms.

The current recessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. has re-awakened concern over the relationship between tax policy and economic growth. How does our current tax system impact the industrial base, both in manufacturing and the service sectors? This question, we believe, should be at the forefront of every tax policy debate because without a strong and growing economy, the tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. itself is eroded. And, if the U.S. is to continue as a world leader, we must set tax policies that will put us on a path of expansion to induce more investment, more research, increased productivity and increased employment.

The presentations at the seminar and our precis of each are contained in these proceedings. Instrumental in putting together the program were James Q. Riordan and James C. Miller III, co-chairmen of the Tax Foundation, along with Robert Hannon, M.D. “Buck” Menssen and Glenn White, co-chairmen of the Tax Foundation’s Program Committee . The Foundation’s special thanks go to Edward A. Sprague, consultant to the Tax Council, for editing the proceedings.