William Thomas, Chairman of the House Ways and Means Committee, is trying to fix the provisions of the tax code that make it difficult for U.S.-based companies to compete in international markets. The summary of the Chairman’s Bill says, *”The United States Tax Code is one of the most complex in the world. The inequities and burdens that our tax system imposes on U.S. companies, particularly those operating in international markets, are greater than those imposed by most other nations.”*
In a letter sent to the Chairman this past week, the members of the Washington-based Coalition for Tax Competition applauded the Committee Chairman. The Coalition, comprised of more than 30 of the country’s largest and most influential free-market groups, however, also urged Chairman Thomas to reconsider two of the major provisions in his bill (H.R. 5095) to simplify international taxes — *’the punitive inversion moratorium’* and the *’tax increase on foreign-based companies that invest in the U.S. economy’.*
A Press Release issued by the Centre for Freedom and Prosperity, one of the leading voices in the Coalition, says that while Chairman Thomas’s proposal is well received, the group is unsympathetic to these two provisions. The Coalition has written to Mr. Thomas, asking that he reconsider the provisions, pledging to work with him to make America’s tax code more competitive.
Andrew F. Quinlan, CFP’s President, says the “Bill Thomas” bill is a good first step. He insists that the tax code must be changed to make the U.S. more hospitable for multinationals. *”Our international tax code is not competitive and inversions are the symptom, not the problem,”* he said.
According to Daniel Mitchell, Senior Fellow, The Heritage Foundation, the U.S. corporate tax rate is the fourth highest in the developed world. He said, *”Chairman Thomas correctly understands that tax reform will create a more level playing field for U.S.-based companies and that this will be good news for American workers and American consumers.”*
Another member of the Coalition, The Cato Institute, recommends that the United States should have a territorial tax system – the notion that governments only tax income earned inside national borders. Cato’s Fiscal Policy Analyst Veronique de Rugy confirms, *”The Thomas legislation is a small but important step in that direction. But the bill could be improved by dropping the inversion moratorium, a provision that is best characterised as fiscal protectionism.”*
Other Coalition members commenting on the Bill say that for the United States to remain a leader in the global economy, its international taxes must remain competitive with other nations. They express the hope that this bill represents but a first step in the continuing effort to reform the U.S. tax code.