International tax policy has been a hot topic inside the Beltway since last year. With all the talk, policymakers and stakeholders alike have wondered what’s in store for 2016 and beyond. While passage of legislation remains uncertain this year, on Wednesday, the House Committee on Ways and Means helpfully furthered the conversation with its hearing “The Global Tax Environment and Implications for International Tax Reform.”
In his opening statement, Chairman Brady established the backdrop for the hearing by pointing to a set of factors pressing Congress toward reform, including the flurry of acquisitions in recent years, the state aid actions coming from the European Commission, and the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) process which is aimed at coordinating international taxation among OECD member countries. Chairman Brady’s comments reinforced the notion that these issues must be addressed through a comprehensive rewrite of the code.
Witness testimony also touched on these drivers while presenting tax writers with suggestions for a pathway forward. Importantly, there continued to be unanimous agreement that the status quo is unacceptable. Interestingly, all witnesses focused on the need to lower the corporate rate as a top concern, and nearly all endorsed a move to a territorial system of taxation. Without such reforms, the panelists agreed that there will continue to be economic distortions resulting from our current code.
At ITI, we appreciate the focus on reform, especially through the lens of global competitiveness. The tech sector is innovation based and global in its essence and the policies implicated by Wednesday’s hearing will determine the future strength of our economy – in the United States and around the world. We know that these are thorny issues that require serious examination and debate. Ways and Means leadership set a tone at this hearing that they understand the challenges and are poised to tackle them thoughtfully.