We mustn’t miss the chance to boost the American economy, say John Stephens and Betty Manetta
The American economy, long the world’s largest and most dynamic, is in a rut. Since 2010, real gross domestic product growth has averaged an anemic 2 percent, well below historic norms.
And here’s why that matters: As the American economy goes, so goes American business — whether big or small. The logic is pretty straightforward. When the economy is weak, companies don’t invest or hire as much as they do when economic growth is strong.
So, it’s no surprise that private sector investment, one of the best indicators of economic strength and a key driver of growth, is at lows not seen in generations.
It doesn’t have to be this way. Robust economic growth is one of the few things that everyone supports, regardless of political persuasion. So how do we get there?
The main driver of that growth is private sector investment. And the best way to increase private sector investment is to make America’s business tax rate competitive.
It has been three decades since the tax code has been significantly updated. Since then, most other developed countries have lowered their business tax rates, attracting investment and job growth, while the U.S. has stayed on the sidelines. And the result? The U.S. business tax rate is no longer competitive, with the highest rate among industrialized economies in the world. For large and small companies alike, this drives down investment and pushes jobs overseas.
We have a once-in-a-generation opportunity to comprehensively address this competitive imbalance. Modernizing our business tax laws will help unleash the full power of American ideas and industry.
Here’s one example: AT&T already invests more in the U.S. than any other public company, more than $135 billion since 2012, including wireless and spectrum acquisitions. But if Washington reforms the business tax rate, we would be able to invest even more in our networks and capabilities. That creates good-paying jobs, 7,000 for every additional $1 billion we spend, as it flows into the broader economy.
A case in point is Argent Associates, an integration and supply chain-company based in Plano. Argent supplies AT&T with testing, installation and logistical support services for the network infrastructure, as it does for many other companies. And when Argent’s business customers have more capital to spend with them, Argent in turn has more resources to invest in jobs, wages and growth. More GDP growth leads to higher business investment, which leads to higher demand for products and services, which leads to more jobs. And so it goes, a classic virtuous circle.
Even modest business tax reform would have a positive impact, boosting wages and growth.
Every month the United States goes without reforming its outdated business tax code is another month of missed opportunity and stunted economic growth.
We applaud policymakers in Washington for beginning the long-overdue process of reform. The well-being of our families and communities depends on it. For their sake, we can‘t afford to let this opportunity go to waste.