The past four years I have been honored to serve on the Manufacturing Council, a group of 25 business leaders who advise U.S. Secretary of Commerce Penny Pritzker. Our council has considered and made recommendations on many challenges facing U.S. businesses including taxation, trade, energy, innovation, and workforce issues. All of these issues are not only important to our nation but also to the boating industry.
For the past two years I have co-chaired the Trade and Tax Policy Committee of the Manufacturing Council. While we have been focused primarily on trade issues, we have also spent time focusing on the challenges to U.S. growth resulting from our antiquated tax code. Much of the current tax code was written back when the U.S. was the world’s sole economic powerhouse and before the emergence of the global economy in which we all compete today.
Our company, Correct Craft, and its subsidiaries compete in about 70 countries and I think I have visited them all. Many government officials (and others) in those countries have done their best to convince me that they are the best place to manufacture our products and they are very convincing. I can attest first hand to the fact that the global economy is real and that countries all over the world are both structuring their tax codes attractively and providing other incentives to attract U.S. businesses.
For a multitude of reasons most U.S. businesses prefer to manufacture their products in the U.S.; therefore, the U.S. does not have to be the least expensive place to operate. However, in some cases our taxation of business is so antiquated that we inflict material disadvantages on companies that prefer to operate domestically; fortunately we can fix this.
The first thing we need to address is our tax rates, which are among the highest in the world. We can make U.S. companies more competitive and encourage manufacturers to build their products domestically by lowering their tax rates to a more globally competitive level of 25 percent or lower. I understand that this must be done in conjunction with eliminating tax loopholes to protect the tax base (and to not create an unmanageable and national debt increasing revenue loss) which is difficult but can be done; many people have made proposals addressing this issue.
The second thing we should do is bring money back to the U.S. by eliminating the built-in tax penalties that motivate organizations who have made money outside the U.S. to keep that money outside the country. Today money made entirely overseas and taxed overseas is subject to full taxation if brought back to the U.S. Potentially trillions of dollars are being kept overseas because the U.S. tax code punishes organizations that bring their global earnings back home. We need a provision in our tax code that reduces the tax on overseas earnings to encourage companies to bring that money back to the U.S and invest it in our economy.
As we continue to compete globally, these reforms would be very positive for the boating industry and even more importantly, for our nation.
I have been to the White House on multiple occasions and have spoken about these issues with the current administration as well as Congressional leaders in both parties. What’s really interesting is that many of them (in both parties) tell me that they agree with the points I have listed above. However, we just can’t seem to get the necessary reforms enacted. We need our leaders to demonstrate leadership by stepping above politics to do what is right on these issues. We are unnecessarily hurting our country (and the boating industry) by failing to act.
I strongly encourage both the administration and Congress to set aside partisan politics and do what is best for our country (and the boating industry) by implementing these common sense and widely accepted tax reforms.
Bill Yeargin is the president and CEO of Correct Craft.