Lawmakers should prioritize provisions to accelerate domestic investment, productivity, innovation and competitiveness when reforming the corporate tax code, according to a new take on the subject by the Information Technology and Innovation Foundation, a tech-policy think tank.
Citing the three decades since a major overhaul of the tax code, the ITIF suggests Congress give the topic due floor time alongside health care and infrastructure in order to lessen significant compliance costs on businesses and incentivize companies to invest profits in the U.S. against global competition.
The ITIF’s proposed pro-growth components include:
A substantially lower corporate statutory rate.
The ITIF feels lowering the corporate statutory rate and adjusting beneficial provisions will help reduce many distortions in the tax code.
A maximum rate on foreign profits of 15 percent, with credit for foreign taxes and the elimination of deferred taxes on foreign profits.
A change to a territorial system and eliminating deferral would help reduce motivation for U.S. companies to relocate to foreign countries and send liquid investments abroad.
An enhanced research and development tax credit.
The research and experimentation tax credit for research companies performing above a baseline promotes the improvement of social welfare by addressing serious market failures, so it should be expanded rather than weakened.
An innovation box.
Insisting that companies perform much of the research or production in this country in order to receive lower taxes on qualifying activity such as patents, royalties and research would lure more of the innovation-related economic activity to these shores.
Strong incentives for capital investment.
To counter lower investment in plants and equipment, a revision of depreciation thresholds and bonuses under Section 179 could be used to encourage domestic growth.
Following those “must-have” reforms that ITIF feels are important to the nation as a whole, the report also looks at some “nice-to-have” items, including individual tax reform, a lower effective corporate rate, border adjustability, immediate expensing and interest deductibility. However, the ITIF doesn’t feel these items are worth jeopardizing a push for consensus on alternatives to complicated tax provisions.
The entire report can be found on ITIF’s website.
Tech-policy think tank promotes tax code reforms
