Broken business tax system hurts workers, economy

Our nation is at a crossroads as Congress debates the path forward on historic tax reform. At stake in that debate is whether Washington, D.C. will continue to keep our country stuck behind the rest of the world in a tax code traffic jam, or will it finally kick our economy into high gear by merging into a globally competitive lane.

The status quo is unacceptable -- we all know that. In fact, today we are shackling ourselves to the industrialized world's highest corporate tax rate -- and that's a burden borne by Missouri workers.

Yes, the current corporate rate must bear responsibility for reduced job opportunities in America. In the U.S. today, the federal corporate rate is 35 percent; in addition, the average of the states is four percent, although Missouri's rate is 6.25 percent -- so that means a Missouri-based company is looking at a tax rate of over 40 percent.

In the meantime, the nations with which we compete have a much lower rate -- around 24 percent. Yes, the average of the 35 member-states of the Organization for Economic Cooperation and Development (OECD) -- the "club" of advanced economies -- is a full 15 percentage points lower than ours.

So we can see: Our government isn't so much collecting taxes as it is constricting economic growth. That US rate of 39 percent is, indeed, a millstone. As a result, our GDP is more than $320 billion lower and American companies -- nearly 5,000 from 2004 to 2016 -- are fleeing for cheaper shores abroad. Competing countries the world over aren't waiting to lure job-creating businesses. Neither should we.

Lost opportunities for American workers are only compounded by lowered wages.

A September analysis from the National Retail Federation shows that "between 25 and 75 percent of the U.S. corporate income tax is borne by workers" as "high corporate tax rates push down the wages of the average corporate worker by as much as $4,690 a year." That is, the average working stiff could be losing almost $400 a month in lower wages thanks to the current tax code. So let's each pause to consider the benefits of putting that extra money in the pockets of our workers annually, and then multiply that by the countless number of Americans who would have been hired by those nearly 5,000 lost companies.

Righting those wrongs, the Tax Cuts and Jobs Act, is landmark legislation that lives up to its name. We are optimistic that the two chambers will complete their work soon and send a finished bill for President Trump to sign.

Achieving a globally competitive corporate tax rate on a permanent basis, as called for in the proposals put forth by the House and Senate, is the single greatest action Congress can take to unlock explosive economic growth. In Missouri alone, the version slated to soon be considered by the Senate would, per a recent report from the nonpartisan Tax Foundation, help create more than 18,000 new jobs. The report, which aligns with a flurry of similar analyses -- including studies from President Trump's Council of Economic Advisers -- also projected "a 3.7 percent increase in GDP over the long term, 2.9 percent higher wages, and an additional 925,000 full-time equivalent jobs."

As alumni of both Democratic and Republican administrations, and as co-chairs of the RATE Coalition -- whose members have created 643,273 jobs right here in Missouri -- we are proud to join the growing chorus of leaders from across the political spectrum in supporting a boost to our prosperity via a reduction in our corporate tax rate. We recall fondly the epic success of 1986, when the two parties jointly came together to reform our tax code; that was a shining moment for bipartisanship and a glowing moment for the economy. We would like to see that spirit of bipartisanship rekindled; yet in the meantime, we both see the urgency of tax reform for the 21st century.

Today, policy makers in Washington have the opportunity -- the obligation -- to rise to their responsibility by fixing our broken business tax system. Their willingness to embrace that obligation by enacting the first meaningful, comprehensive tax reform package in 31 years couldn't be more consequential for American businesses of all sizes and the Missouri workers they employ.

James Pinkerton, a Republican, and Elaine Kamarck, a Democrat, are national co-chairs of The RATE Coalition.