As our leaders develop a proposed overhaul for our tax code, manufacturers like PPG are looking for reform in a number of areas to create a tax system that aids and encourages U.S. competitiveness. Here in Delaware, Ohio, PPG employs about 390 people, providing opportunities for people in a variety of positions from engineering to product development to maintenance and trades. Our tax system must benefit manufacturers and employees. Our current system is outdated and hurts everyone from large to small manufacturers.
So how can we level the playing field? First, we can simplify the tax code. This creates a more equitable, balanced system and establishes a level playing field that fosters a fair and competitive environment for business. Money can stay where it’s needed most — to empower manufacturers and their workers to invest in their communities, support their families, grow the economy, create more jobs and make manufacturing in the United States more competitive globally.
Next, our corporate tax system needs to be more competitive, encourage innovation and spur investment, job creation and economic growth. This begins with a lower corporate tax rate. The U.S. has the highest corporate tax rate among developed countries. In recent years, nearly 60 countries have cut their corporate taxes to encourage economic growth. By standing still, the U.S. has fallen behind. Reducing the corporate tax rate would make the U.S. tax system more competitive. If we are serious about creating a climate for economic growth, now is the time to adopt tax policies that empower U.S. companies to become more competitive and make our country a more attractive place to invest.
Finally, reform in our current international tax system can do more to promote global competitiveness. Currently, U.S. businesses are expected to pay the same amount of tax on income that they earn abroad, when repatriated, as they would if they earned that income in the U.S. These current tax laws make it more difficult for U.S. companies to compete in the global marketplace vs. competitors from other countries. If U.S. companies cannot compete abroad, where 95 percent of the world’s consumers are located, the U.S. economy suffers from the loss of both foreign markets and domestic jobs that support foreign operations. We need to be consistent with other developed countries and adopt a territorial system that taxes businesses on income earned within a country’s borders.
While our focus is on simplifying the tax code, lowering corporate tax rates and adopting a competitive territorial tax system, there are also other avenues we can take. To promote innovation among U.S. companies, we can strengthen research and development (R&D) tax credits and push for R&D deductions. Nearly 18,000 companies of all sizes use the R&D credit, and some 70 percent of credit dollars are used for salaries of workers engaged in R&D. This encourages the creation of more high-paying U.S. jobs. The manufacturing industry employs more than 12 million men and women, contributes $2.17 trillion to the U.S. economy annually, has the largest economic impact of any major sector and accounts for more than three-quarters of private-sector research and development. It’s an industry that has a huge impact on our nation as a whole.
Deductions and strengthened credits would aid the industry and, in result, the United States. It would assure U.S. companies the credit would be available for new, innovative projects and continuous growth.
There is widespread agreement that the current system hurts jobs and suppresses wages for U.S. workers. To make U.S. businesses more competitive, manufacturers such as PPG support simplifying the tax code, lowering corporate tax rates, and adopting a competitive territorial tax system. The success of manufacturing and the economy in the U.S. depends on our leaders taking action right now while we have the opportunity. It will make a big difference here in Delaware, Ohio as well as for manufacturers throughout the United States.
Chuck Kochanski is plant manager of PPG in Delaware, Ohio.