For those of us whose jobs are dependent upon the nation’s elected leaders delivering on their promise of comprehensive comprehensively reform our tax code, we were encouraged that Senate Majority Leader Mitch McConnell considered shortening the traditional seven-week “August recess” by at least two weeks, in order “to complete action on important legislative items.”
With Congress now on recess, we wonder: could there be anything more important than promoting growth, jobs and prosperity, all while supporting America’s competitive standing in the world, and easing tax burdens on employers and employees alike? Because that is what fixing our tax code for the first time in a generation would do, it’s difficult to imagine a more important mission.
In the private sector, I’ve never known anyone who can afford to take seven (or for that matter, five) continuous weeks of vacation time. Everyone I know is too busy, too worried, and too focused on surviving, for themselves and their families. These are plumbers, welders, pipe-fitters, HVAC technicians, and other skilled trade workers. Industrious Americans all, who, in everyday conversation, couldn’t be less interested in debating “policy issues” of the day. And yet, all of us see first-hand the debilitating effect our country’s outdated tax code has had on our local, state, and national economies, and on their own employment prospects.
Few of us can clearly remember when both political parties in Congress last came together to fix America’s tax code. It was more than 30 years ago. But we have all seen American companies downsize, or relocate their manufacturing facilities to China or Mexico, or any number of countries that have a more reasonable tax climate than we do.
Of course, we have also seen – and many of us have worked for – those U.S. companies that were forced to close, unable to handle the tax burden, the competitive advantage enjoyed by their foreign counterparts, or both. It has been devastating for communities across the country, including here in Utah.
This is what happens when you have among the highest corporate tax rates in the industrialized world, as we do in America; combined state and federal, it’s 39 percent, while foreign-based companies competing with our businesses enjoy, on average, a rate of 22.5 percent.
U.S. companies are also forced to pay taxes twice for income they’ve earned both in the U.S. and overseas through our outdated worldwide tax system. America is almost alone among developed countries in using this system. The result is trillions in American capital stranded offshore.
It’s been a while since we’ve enjoyed boom times. We have all seen the economic data. It is plentiful, compelling, and depressing. It is also very personal to me and my fellow mechanical contractors. Our life-blood is comprised of major mechanical systems for new and existing businesses. When those businesses fail – or, just as bad, when they fail to materialize – we don’t eat. When those companies ship south to Mexico, or West to China, we don’t eat (and, we certainly do not vacation). Our sustenance is dependent entirely on investment in U.S. companies and American enterprise, with an emphasis on new construction for commercial buildings and retail centers.
America, and American workers, yearn for renewed growth, steady employment, economic sustainability, and prosperity within reach. We don’t begrudge Congress its summer vacation. But we do hope it will soon get busy enacting comprehensive tax reforms. Such reform should include lowering the rates for all businesses, applying them uniformly across all sectors, and employing a territorial system of taxation. American investment, productivity, and jobs will soon follow.
Larry Hansen is CEO of KOH Mechanical and vice president of the Utah Mechanical Contractors Association.