The case for tax reform
The Great Recession may have officially ended in 2009, but there's no denying the recovery continues to be slow and anemic: The overall economy grew at a paltry 1.9 percent in the final quarter of last year.
The economic situation over the last eight years has been especially hard on minorities, the shrinking middle class and business development around the nation and here in Pennsylvania.
In remarks in late 2015 to the African American Chamber of Commerce of Western Pennsylvania, Gov. Tom Wolf described the challenges facing the state. He noted, “Our economy doesn't work if some people feel the deck is stacked against them. Our free market economy runs on fairness. ... A tilted playing field dampens competition … . It also makes an economy less dynamic and less productive. ... Our economy cannot operate on all cylinders if all the cylinders are not allowed to operate.”
Indeed, Pennsylvania continues to struggle as evidenced by a 2015 growth rate below the national average — 1.7 percent compared to 2.4 percent.
The focus by President Donald Trump and Congress on job creation, boosting economic growth and regulatory reform, provides a unique opportunity to make Pennsylvania's economy healthier. The National Black Chamber of Commerce supports the U.S. House tax-reform blueprint — A Better Way — which will make the tax code simpler and fairer, lowering tax rates for individuals, small businesses and corporations, encouraging new business formation, and ending tax discrimination against domestic manufacturers and other businesses.
Small business is the driver of job creation, accounting for about 65 percent of new jobs. Here in Pennsylvania, small businesses employed 2.4 million people in 2013. But for its economy to “fire on all cylinders,” the nation's corporate tax rate must be lowered from the highest in the developed world — currently 35 percent versus a developed-world average of 22.5 percent.
Equally critical, the tax treatment for imports and exports has to be put on a level playing field. Many of our global competitors exempt their exports from their value added tax. There is no similar provision in the U.S. tax code. This means our global trading partners have an unfair tax advantage over American-made goods; our exports consequently carry a higher cost in the global marketplace.
The nonpartisan Tax Foundation's economic analyses of the House's proposed blueprint have concluded that leveling the playing field will increase domestic investment and job creation, hence strengthening our economy. The analyses also have concluded that border adjustment — which eliminates the double-taxation of goods being sold outside the U.S. — would strengthen the dollar, having the effect of lowering the cost of imports. This outcome is important because it means that the cost to consumers would not increase.
Pennsylvania's elected leaders in Congress should prioritize the interests of the state's consumers, who desire low prices on products, and the state's workers and the businesses that employ us.
The citizens of Pennsylvania can look forward to a brighter tomorrow from a stronger economy if Congress and the Trump administration move quickly on tax reform.
Harry Alford is president and CEO of the National Black Chamber of Commerce.