It has been more than 50 years since the United States updated its international tax system. Is it any wonder then, why there is a growing frustration that the system doesn't work? In that half century, the world has changed dramatically, and we now find ourselves in a dynamic global marketplace. And while U.S. companies long ago determined that they had to embrace change or else fail, the status quo in Washington grew roots.
The resulting inaction has left us with an international tax system that puts American companies and our workers at a disadvantage as they try to compete in a new world. At a time when unemployment remains stubbornly high and growth is painfully slow, it just doesn't make sense to stifle U.S.-headquartered companies with a burdensome tax code created before the push-button phone.
There are some who recognize that globally engaged U.S. companies have to deal with an outdated system, but then also claim these companies pay too little as it is. This kind of thinking fails to recognize that U.S. companies pay not only the highest statutory tax rate in the industrialized world, but also a higher effective tax rate than our competitors.
With 95 percent of the world's customers living outside the United States, we need to level the playing field for American companies and workers so that they can sell more goods and services around the world -- because it's good for America if they do. In fact, for every dollar U.S. companies invest abroad, they invest $3.50 at home. We also want a tax system that makes America the best place to start and grow a business. Unfortunately, our international tax laws actually make it easier for U.S. companies to invest anywhere in the world -- except America.
The LIFT (Let's Invest for Tomorrow) America Coalition strongly supports efforts being championed by Chairman Camp, as well as President Obama's multiple economic advisory committees, who have urged reform to a territorial system of international taxation.
Under this more competitive system, U.S. companies would pay taxes once in the United States on profits earned here and once in the foreign countries where they do business. And without the burden of a third tax, U.S. companies are more likely to bring home approximately $1.7 trillion in locked out foreign earnings to invest inside the United States. That's money that could be spent on enhanced research and development, new plant and equipment purchases and most importantly, new American jobs.
Fifty years is long enough, we have fallen behind by standing still. The current U.S. international system is broken and only benefits our competitors. It's time we make it work for our economy, businesses and workers.
The Let's Invest for Tomorrow (LIFT) America is a coalition of U.S.-headquartered companies, trade associations and economic stakeholders representing industries that are critical to the American economy. The coalition supports a modernized "Territorial 2.0″ Tax System that strengthens America's competitiveness in the global marketplace, promotes increased U.S. investment and protects America's tax base.