Taxation on Individual Citizens

You cannot talk about tax reform without also discussing spending. For a long time people talked about the tax and spend mentality in Washington, DC, now that philosophy seems to be changing. Our politicians seem to have thrown caution to the wind and reversed themselves. Now they spend first, and hit us with taxes and fees later. Of course, they tell us they do so in the name of economic stimulus and recovery, but we know better.

For too long our elected officials have spoken about tax reform without any real observable action. The politicians seem to agree that the current tax code is overly complicated, but they never take the necessary steps to simplify the system. Through the years a number of alternative tax policies have been proposed (Fair Tax, Flat Tax, Alternative Minimum Tax), each with different strengths and weaknesses. None of these however, has been seriously considered to replace our existing complicated and burdensome system.

Recently, I was watching Sean Hannity's news commentary program. Mr. Hannity asked Republican Representative Paul Ryan from Wisconsin if the Republicans would be willing to commit to stopping the earmark spending in Congress. Unfortunately, Representative Ryan's response was all too common. He indicated that the Republicans have proposed a moratorium on earmark spending. That is not leadership! A moratorium is a period of time where a certain activity is not allowed. This would only curtail the problem until they thought we, the people, were not watching anymore, and they would go back to business as usual with their pork barrel, and pet project spending.

Personally, I find this incredibly insulting. I believe that we need to demonstrate a real commitment to stopping the out of control spending and taxation in Washington, DC. Therefore, as your representative I will:

• Support legislation that prevents unbudgeted expenses from being added to proposed bills.
• Sponsor, and support legislation that replaces our current tax system with a process that is easy to interpret, understand and reduces the overall tax burden on citizens.

Corporation Taxation

Suppose you were the head of a publicly traded company. Your objective is to return the most profit possible to your shareholders. You are looking to expand your manufacturing operations by opening a new facility. Obviously, you will need to make the decision on where to locate this new facility based on a number of factors. One of these factors will certainly be the amount of taxes you will be required to pay on your earnings. According to the Organization for Economic Co-operation and Development (OECD) the combined corporate income tax rate for the United States was 39.25% in 2008. This is the second highest among 30 participating countries behind only Japan at 39.54%. It is also 12.65 percentage points higher than the OECD average corporate income tax rate.

If your organization produced $100 million per year in earnings you would pay $39.25 million in corporate taxes if your facility were located in the United States. If however, you located your facility in another country with a corporate tax at the OECD average and were able to earn the same $100 million you would expect to pay $26.6 million in corporate taxes. This would return an extra $12.65 million to the shareholders. Given this scenario, where would you locate the facility?

The fact is that this hypothetical scenario happens every day in business. While corporate tax rates are not the only issue considered when making these types of decisions, they certainly play a significant role. Every time a U.S. business makes a decision to locate a new facility overseas, Americans miss out on new job opportunities. I believe we need more elected officials who understand this consequence, especially as the unemployment rate continues to climb across the nation. We will have to make an adjustment to our corporate tax policy if we expect to encourage growth at home. Whether we choose to realize it or not we are in an economic competition on a global scale, and the U.S. has not maintained pace with other nations when it comes to our corporate tax rates.

As your representative I will work to create an environment where investing at home makes good business sense. By ensuring that the U.S. creates a corporate tax strategy that is competitive and fair we will keep our jobs from being exported overseas.