WASHINGTON — A coalition of chief executive officers from 21 companies, including Macy’s Inc. and Gap Inc., sent a letter to the leaders of the two tax writing committees in the House and Senate, reiterating their call for corporate tax reform and a lower corporate tax rate.
Terry J. Lundgren, Macy’s chairman, president and ceo; Glenn Murphy, chairman and ceo of Gap, and Matthew Shay, president and ceo of the National Retail Federation joined the other corporate leaders in pressing for tax reform to spur economic growth and job creation. They are members of the Reforming America’s Taxes Equitably Coalition.
In their letter to Senate Finance Committee chairman Max Baucus (D., Mont.) and House Ways & Means Committee chairman Dave Camp (R., Mich.), and the respective ranking members, the executives said the U.S. tax system “makes American businesses less competitive and makes the U.S. a less attractive place for investment, ultimately harming businesses, investors, workers and consumers.”
They argued that the current top federal corporate tax rate in the U.S. of 35 percent is 10 percentage points higher than the average of the member countries of the Organization for Economic Cooperation & Development and 15 points higher when state and local taxes are included.
“The costs to our economy are significant and already being realized,” the ceos said, citing a new study by Ernst & Young projecting gross domestic product to be between 1.2 and 2 percent lower this year as a result of the corporate tax rate.
“Simply put, the U.S. can no longer afford to stand still,” they said. “As leaders in Congress, each of you has called for tax reform that will put our economy on track toward sustainable, long-term growth.”
Congress and the White House have indicated they are planning to begin a review of the U.S. tax system this year with the hope of building a bipartisan consensus. Camp has proposed a plan that would lower the top corporate rate to 25 percent from 35 percent and eliminate certain tax deductions and credits. The NRF has supported that proposal.
However, retailers decried President Obama’s tax reform proposal last year, arguing it did not go far enough to lessen the burden on U.S. companies. Under Obama’s plan, the corporate tax rate would be reduced to 28 percent from 35 percent. Manufacturers would receive a reduction in their effective rates to 25 percent — a provision that retailers argue favors one industry over another. Obama’s proposal also called for the elimination of dozens of tax loopholes and expenditures, including an accounting method regularly used by retailers, which merchants contend could be costly.