Corporate Tax Rate and the International Tax Code

Do you think that the new tax act helped or further complicated the tax code?
I think the tax code has been continuously updated to try to reduce complexity, though it still has not achieved the level of simplicity that everyday people would have hoped. “The general movement over the years toward using the tax system to accomplish various policy objectives, through the use of so-called ‘tax expenditures,’ has led to greater complexity” (Gill, 2018). It seems as though the real reasoning behind tax code updates by politicians has been to stimulate the economy and simplicity was not the main goal. Even with the potential benefits for individuals and companies through the use of tax breaks, etc. the tax code is too complex for most people to understand. I think the tax code has a long way to go before it will be as simple as politicians say it will be for the everyday person.
Have we become more competitive with other countries?
I think we have improved our competitiveness with other countries, but we still could do better. “The TCJA substantially reduced, but did not eliminate, the incentive for US corporations to shift profits to tax havens”. Prior to the TCJA the tax code didn’t favor the U.S. keeping business here and many companies shifted profits to countries with little to no corporate income tax. Though the TCJA reduced the U.S. income tax, companies are still shifting profits to lower tax countries. “We must write tax rules that take into account what other countries are doing. If what they are doing is inconsistent with improving their own international competitiveness, then we should not follow. But if they appear to be moving in ways that will improve their ability to compete, then we must reconsider the extent to which our rules impede the flow of capital of US businesses, necessitate inefficient business structures and operations, and leave US companies and workers in a less competitive position.” (Testimony of Pamela Olson, 2003). If U.S. companies are still shifting profits and other foreign entities benefit more from the same foreign investments, then the U.S. needs to reconsider our international tax laws. We cannot be competitive if other countries are benefitting more than we are.
Why is international tax so important to the U.S. tax code?
“The structure of a country’s tax code is a determining factor of its economic performance” (Bunn & Hogreve, 2022). “The concern this Committee faces today is that our tax code has not kept pace with the changes in our economy” (Testimony of Pamela Olson, 2003). The way the world is now means that countries are building and investing in many companies across the globe. If a country wants to be competitive in the market, there need to be incentives that make them competitive. If there are, then countries will invest there and their economy will grow. The U.S. wants to have a thriving economy, then they need to have a competitive international tax code.