OCTOBER JOBS: Corporate tax reform needed to bring down the price of job creation
(ATLANTA, GA) While today’s jobs report for October failed to make much of a dent in the unemployment rate, and continues to show low labor force participation, the CEOs of Job Creators Network argue it shouldn’t be surprising after the weak GDP growth the nation posted for the third quarter of 2015. They are calling on policymakers to enact fundamental tax reform as one path out of the nation’s economic wilderness.
“There’s not much of an economic recovery going on with annual economic growth that’s stuck well below 3 percent,” said Scott Verner, president and CEO of Nipro Diagnostics, and a member of the Job Creators Network. “We need to produce more if we want more jobs, and that means GDP growing at well over 3 percent.”
According to a Reuters report last week, year-over-year GDP growth has failed to break above 2.5 percent since the end of the Great Recession in 2009. GDP increased at just a 1.5 percent annualized rate for the third quarter of this year.
“A big part of our problem is that the price of doing business in America is too high,” continued Verner. “That’s a problem Washington can fix and one they should be fixing.” One harmful effect is that the tax code distorts the decisions U.S. companies make regarding where to allocate capital. A March report from Bloomberg Business revealed $2.1 trillion in profits earned by U.S. companies abroad have not been brought back home.
“Real sustained growth has to come from eliminating policies that hurt job creation, and allow corporations to repatriate the $2.1 trillion held overseas,” said Verner. “Imagine that deposit in your local bank instead of the government using tax payer dollars to strengthen the balance sheets of lending institutions.”
The combined corporate tax rate in the United States is 39.1 percent, according to the Business Roundtable, using OECD statistics. BRT notes this is the highest in the developed world, with the OECD average being less than 25 percent.
“We need business tax reform that gets rid of the loopholes and gets the United States back in line with what the rest of the world is charging,” concluded Verner. “If we want stronger jobs reports, then we need to bring down the cost of creating jobs.”
The October employment report, released this morning by the U.S. Bureau of Labor Statistics, showed 271,000 jobs created during the month, an official unemployment rate of 5.0 percent, and a labor force participation rate of 62.4 percent – sharply down from the 65.7 percent rate that existed when the Great Recession ended in June of 2009.