The U.S. is losing its global competitive edge in innovation and manufacturing. This is partly due to a burdensome corporate tax system and overall tax rate that is much higher than most other Organization for Economic Co-operation & Development (OECD) countries. Moreover, many countries impose domestic taxes only on income generated within their borders (i.e., territorial tax model), leaving the U.S. out-of-step with its global competitors. MichBio supports comprehensive tax reform that would lower corporate tax rates, incentivize research and development, and make U.S. innovation more competitive.
Rep. Dave Camp (R-04, MI), as Chair of the House Ways & Means Committee, and former Sen. Max Baucus (D-MT) as Chair of the Senate Finance Committee worked diligently for well over two years in an attempt to rework the U.S. tax system. On February 26, 2014, Rep. Camp sought to bring attention on corporate tax overhaul by releasing his long-awaited tax
reform proposal. The measure would:
Eliminate the modified accelerated cost recovery system;
Extend lives for depreciation of property by requiring amortization instead of expensing for R&D and advertising costs;
Institute a territorial tax system with a 95% exemption of dividends received by U.S. corporations from foreign subsidiaries;
Tax intangible income from foreign markets at 15%;
Allow for a one time transition tax on all previously untaxed foreign earnings and profits of foreign subsidiaries of U.S. corporations.
future of the proposal is unclear. Corporate America was mostly displeased. By eliminating tax
provisions such as accelerated depreciation, the LIFO (Last In, First Out) accounting method,
and scores of industry-related tax deductions, the plan calls for
ending many of the provisions that companies hold sacred. Regardless of what is to come, the proposal will have a major impact on
the tax reform debate going forward and MichBio will be engaged, especially for as long as Reps. Camp and Sandy Levin (D-09, MI) remain Chair and Ranking Member of Ways & Means.