In America, we have an intrinsic value for competition. Competition is the driving force behind a healthy free market, and it is from this free market that we derive a great deal of our political freedom.
(New York Times columnist) Milton Friedman wrote that history suggests capitalism is a necessary condition for political freedom; clearly it is not a sufficient condition. His assertion astutely links our free market to our political freedoms. This underscores the importance of competition to American civil society. It amazes me that Washington liberals do not have the same value for Americas ability to compete.
Consider our tax code in the global marketplace.
According to the Organization for Economic Cooperation, the average corporate tax rate for industrial countries is 25 percent. America is among the highest, at 35 percent. When making decisions for their companies, CEOs and boards of directors are always going to consider tax consequences. When you consider America against China, from a tax perspective, the choice is obvious. Yet we have not given the U.S. the tools to compete in a global marketplace.
Some might argue that this is not a problem because so many corporations do not even pay taxes. The New York Times recently highlighted how General Electric Co.has turned our tax code into a source of revenue. With their hundreds of former federal employees and tax specialists, they have manipulated tax credits and loopholes to not just avoid paying taxes, but to receive returns amounting in the billions of dollars.
This problem exists because the tax code is designed to pick winners and losers. By creating tax credits for the manufacturing of select products --i.e., turbine propellers for alternative energy sources --or loopholes for politically favored industries,our government picks which businesses win in the marketplace. This interference by the government stifles competition and innovation. In a free market, where consumers pick the winner, products and industries succeed because of market demands, not political wins.
When government picks the winners, the private sector makes decisions in response to political calculus. The threat of taxes or regulation determines the course of business, as CEOs make contingency plans for government whims. With a simplified, predictable tax code, businesses can create jobs and make investments without the fear of future tax burdens.
In order for our businesses to compete, globally and fairly, we need tax reform now. Rep. Paul Ryan has proposed the Roadmap for Americas Future a plan to achieve tax reform. In his plan, Mr. Ryan argues that a corporate tax of 25 percent paired with the elimination of numerous loopholes and credits will allow the private sector to compete globally, with consumers picking market winners, not government. He should be recognized for his intrepid leadership, offering real solutions to one of our nations greatest challenges.
Congressional Democrats and the president, paralyzed by liberal and union interests, have failed to address this issue. Rep. Ryan understands that for America to succeed, we need a tax code that encourages competition. We need to realize that we are preventing ourselves from competing in the global marketplace. Lowering corporate taxes will not only increase investment and innovation, it will make America competitive. Let consumers pick the winner, not government.
Brian Graham is the co-owner of Dixie Strategies LLC, a Florida-based political consulting firm.
--
