Tax re­form is box of­fice gold for coun­try

Yuma Sun - - OPINION - Ari­zona Cham­ber of Com­merce

The movie in­dus­try in 2017 saw its worst box-of­fice per­for­mance in over a decade. North Amer­i­can re­ceipts were down over 14 per­cent since last sum­mer. Films with big bud­gets fiz­zled and au­di­ences yawned at se­quels.

One ti­tle this sum­mer bucked the down­ward trend, how­ever. Won­der Woman grossed over $410 mil­lion do­mes­ti­cally. (And it’s eas­ily the best movie I’ve seen this year.) The film’s ex­ec­u­tive pro­ducer, Steven Mnuchin, ap­par­ently knows how to back a win­ner. He’s also pro­duced such block­busters as Mad Max: Fury Road and The LEGO Bat­man Movie.

Pres­i­dent Trump and Congress need a hit right now, too.

The task of de­liv­er­ing to the Amer­i­can people the tax pack­age the coun­try needs to re­turn to at least 3 per­cent economic growth will be tested in Mnuchin’s lat­est role as sec­re­tary of the trea­sury, where he’ll be pro­duc­ing, di­rect­ing, and star­ring in the ef­fort of at­tempt­ing to pass the first ma­jor tax re­form pack­age since the Rea­gan ad­min­is­tra­tion, and all with­out the help of Gal Gadot.

While he won’t have a Hol­ly­wood star to shep­herd a bill to pas­sage, Sec­re­tary Mnuchin will have the pres­i­dent and at least one tele­genic leader in Congress, Paul Ryan, to help make the case. And while his act­ing ré­sumé is thin, Sec­re­tary Mnuchin him­self will have to de­liver an Os­car-wor­thy per­for­mance to per­son­ally sell the tax pack­age to Capi­tol Hill and to a skep­ti­cal Amer­i­can pub­lic looking for bi­par­ti­san so­lu­tions.

For tax re­form to be a win­ner, it has to stay sim­ple and go big in just two ar­eas.

First, re­duce the cor­po­rate tax rate to 15 per­cent, which would take us from the world’s high­est cor­po­rate tax rack rate to one of the low­est. This will have a tan­gi­ble, pos­i­tive ef­fect on work­ers’ wages, who cur­rently shoul­der much of their em­ployer’s tax bur­den. A Na­tional Tax Jour­nal study finds that ev­ery $1 in­crease in cor­po­rate tax rev­enue re­sults in a $.60 re­duc­tion in em­ployee wages. It’s time to put more money back into work­ers’ pock­ets and stop tax­ing their pro­duc­tiv­ity.

Sec­ond, pro­vide a very low rate to repa­tri­ate the es­ti­mated $2.5 tril­lion U.S. com­pa­nies have parked over­seas, while ac­count­ing for fu­ture earn­ings by adopt­ing a ter­ri­to­rial tax sys­tem that is the norm among our in­ter­na­tional com­peti­tors.

The Bernie San­ders of the world cry that cor­po­rate taxes as a per­cent­age of gov­ern­ment rev­enues have shrunk to around 9 per­cent. But that’s not be­cause job cre­ators’ taxes are too low, but be­cause they’re so high that com­pa­nies have gone looking for more wel­com­ing shores. Let’s put that cap­i­tal back to work in the U.S. econ­omy.

Both of th­ese flaws in the U.S. tax code are ter­ri­bly harm­ful to the do­mes­tic econ­omy. They stall job creation and they push cor­po­rate head­quar­ters, man­u­fac­tur­ing, and other jobs abroad. If th­ese el­e­ments of our tax code were a movie, it would be called Dumb and Dum­ber.

If the mo­men­tum for re­form re­ally picks up, Mnuchin and com­pany can take a stab at sim­pli­fy­ing and mod­ern­iz­ing a tax code that has be­come overly com­pli­cated and larded with so many cred­its, ex­emp­tions and de­duc­tions that even the best CPAs are left be­fud­dled. But un­less the cor­po­rate tax rate is re­duced and the is­sue of U.S. dol­lars parked over­seas is ad­dressed, any other re­forms would be nib­bling at the edges.

Dra­mat­i­cally re­duc­ing the cor­po­rate tax rate and bring­ing tril­lions in in­vest­ment back to the U.S. are the big, bold moves the U.S. must make if it’s go­ing to com­pete with coun­tries like Ireland, Canada and the United King­dom that have mod­ern­ized their cor­po­rate tax codes in the over 30 years since the last big U.S. re­form.

The sup­port­ing cast mem­bers join­ing the call for tax re­form this year are united in their be­lief that a re­form pack­age is long over­due and ab­so­lutely nec­es­sary. Heavy hit­ters like the U.S. Cham­ber of Com­merce, the Na­tional As­so­ci­a­tion of Man­u­fac­tur­ers, and the Busi­ness Roundtable are all read­ing off the same script on what a reimag­ined tax code ought to look like.

The Busi­ness Roundtable’s chair­man, JPMor­gan Chase CEO Jamie Di­mon, has proven to be an es­pe­cially good spokesman for re­form, ar­gu­ing in an op-ed last month that “Re­form­ing the tax code is the sin­gle most im­por­tant thing that Congress could do to jump-start our econ­omy, cre­ate jobs, and raise wages for Amer­i­can work­ers. Our cur­rent code is un­com­pet­i­tive, overly com­plex and loaded with spe­cial in­ter­est pro­vi­sions that un­fairly cre­ate win­ners and losers.”

If Sec­re­tary Mnuchin and the gang get this deal done, they’ll have the feel-good hit of the year on their hands.

Glenn Hamer is the pres­i­dent and CEO of the Ari­zona Cham­ber of Com­merce and In­dus­try. The Ari­zona Cham­ber of Com­merce and In­dus­try is com­mit­ted to ad­vanc­ing Ari­zona’s com­pet­i­tive po­si­tion in the global econ­omy by ad­vo­cat­ing free-mar­ket poli­cies that stim­u­late economic growth and pros­per­ity for all Ari­zo­nans. http://www.azcham­ber.com/.

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