U.S. Sen. Rob Portman (R-OH) took to the Senate floor this month to illustrate how the broken U.S. tax code is forcing businesses and jobs overseas.
“I rise this evening to talk about an issue that’s critical to keeping jobs here in America, keeping investment here in this country and not driving it overseas,” Portman, the chairman of the Permanent Subcommittee on Investigations (PSI), said. “We had another reminder just last week of just how broken our tax code is when a huge company, Pfizer pharmaceutical company, decided it could no longer compete in the global market as a U.S. corporation. Instead, it’s seeking a merger with an Irish drug maker called Allergan. They want to move their corporate headquarters to Ireland. It’s just another in a long line of companies that have made this decision because our tax code is broken.
“Unfortunately, these kinds of transactions – inversions – are only the tip of the iceberg…These kinds of transactions are causing our jobs and investments to go overseas.”
The U.S. total combined tax rate of 39 percent is the highest business tax rate of any industrialized country, Portman warned, and the burden of that falls on the shoulders of American workers as companies become less competitive and wages and benefits remain lower, resulting in wage stagnation.
“Just by fixing the tax code, we could give the economy a shot in the arm and help lift these wages up,” Portman said. “Instead, so many workers in my home state of Ohio and around this country are working hard, playing by the rules, doing everything right, and yet their wages are flat.
Portman held a PSI hearing in July to explore how the U.S. corporate tax code affects foreign acquisitions of U.S. businesses and the ability to expand U.S. businesses by acquisition.
“Our tax code makes it hard to be an American company, and puts U.S. workers at a disadvantage,” Portman said in his opening remarks at the hearing. “And to add insult to injury our government taxes American businesses for the privileges of taking their overseas profits and reinvesting them here at home, which is something we should be encouraging, not discouraging. And economists tell us, that the burden of corporate taxes falls principally on workers, in the form of lower wages and fewer job opportunities, and again that’s really what is at stake here.
“If there is a villain in this story, it is the U.S. tax code. And, frankly, it’s Washington, not doing what Washington should be doing to reform it.”