CPs to Solve Competitiveness/Economy/stem advanced Manufacturing Networks cp
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- The CP prevents an economic collapse- reducing corporate tax raises investment
- Extend: “Solves Growth”
- Corporate tax reform key to solve inversions – that’s vital to foreign markets and overall US econ
- Tax reform would boost the econ and doesn’t create partisan backlash
- Reducing tax costs spurs economic growth and job creation- additionally there’s no Republican backlash
- The plan is politically supported by Republicans but small conflicts of interests possible
Corporate Tax Reform CPNotesNet benefits are Federalism, Court Politics or any education-based DA like the Two for One DA. You can’t read politics or spending with this CP. 1NC — Corporate Tax Reform CPText: The United States federal government should reduce the federal corporate tax to 15 percent.The CP prevents an economic collapse- reducing corporate tax raises investmentSmith 17— Noah Smith, is a Bloomberg View columnist, was an assistant professor of finance at Stony Brook University, blogs at Noahpinio, 2017 (“There's a Lot to Like About Cutting Corporate Taxes”, Bloomberg, May 4th, https://www.bloomberg.com/view/articles/2017-05-04/there-s-a-lot-to-like-about-cutting-corporate-taxes, Accessed 07-13-2017 // GHS-JK) My Bloomberg View colleague Tyler Cowen received quite a bit of pushback for his endorsement of President Donald Trump’s proposal to cut the federal corporate tax to 15 percent from 35 percent. But Cowen is broadly right -- lowering the tax is a good idea. One reason is that corporate taxation isn't the greatest way of raising revenue. When you tax a corporation, it’s not just the shareholders who pay. Prices for customers go up to some degree, and take-home wages for employees -- both at the top and the bottom of the pay scale -- go down. It’s difficult to tell who pays what -- some economists estimate that shareholders pay essentially all of the tax, while others conclude that workers pay the lion’s share. There’s also a chance that some piece of the corporate tax might fall on those who can least afford to pay, specifically low-wage workers and poor people. That uncertainty implies that society should shift the tax burden from corporations to wealthy individuals. That will ensure that less of the cost of government falls on the poor. Since corporate tax represents only 11 percent of U.S. revenue, replacing some of that with higher top-end income taxes shouldn’t be too difficult. There’s also the question of whether corporate taxes reduce investment. In the 1980s, some economists concluded that taxes on capital -- of which corporate taxes are one variety -- should be zero. Since capital -- the physical kind, buildings and machines and so on -- allows greater production in the future, taxing it today just means a smaller economy, and therefore a smaller tax base, down the road. That result came from a highly unrealistic model, and later economists showed that when you tweak the model a bit, the optimal corporate tax is no longer zero. Still, the U.S. should be focusing on ways to boost business investment, which has fallen as a share of output in recent years: There is plenty of evidence that corporate tax cuts can raise investment levels. A 2009 paper by economists Simeon Djankov, Tim Ganser, Caralee McLiesh, Rita Ramalho, and Andrei Shleifer found that lower corporate taxes are correlated with more investment. And when Canada cut taxes for some kinds of companies but not for others in the early 2000s, the companies that got tax cuts invested more. A number of other studies find similar results. So in this climate of low investment, the U.S. should try corporate tax cuts as one method of getting businesses to spend more. But perhaps the clearest reason to cut corporate taxes is the waste they generate through avoidance. A key, often overlooked fact about the U.S. corporate tax is that many businesses manage to pay little or nothing. One of the most common ways to do this is to shift profits overseas, through transfer pricing, inversions, or other perfectly legal methods, to a tax haven country like the Cayman Islands. There, a company can avoid taxes indefinitely, reinvesting the profits in its business and letting them compound. If the company wants to cash out, it has to repatriate its cash and pay taxes to the U.S., but the returns from delaying the date of payment can be substantial. And often, a corporation can avoid taxes altogether by waiting for the U.S. to enact a repatriation holiday. In addition to tax havens, there are many other legal loopholes businesses can exploit to avoid taxes. As a result of avoidance, the U.S. doesn’t collect much more of corporations’ profits than other countries do, despite having a much higher official tax rate. A number of recent studies find that on average, U.S. companies pay about 27 percent to 30 percent of their profits in taxes, compared with 24 percent to 26 percent average for other nations. Meanwhile, because of tax avoidance, the true rate isn't closely tied to the headline rate. The official U.S. rate has remained at 35 percent since 1993, with only minor changes. But the percent of corporate profits collected through the tax system has fallen quite a bit: All that avoidance costs real resources -- hours of labor by tax accountants and financial professionals, buildings for them to work in, and computers to keep everything in order. By cutting the corporate tax rate, the U.S. would reduce the incentive for companies to waste all that money avoiding taxes. Extend: “Solves Growth”Corporate tax reforms are key to growth- only the CP solves a weak economyKudlow 16 “Trump Must Spend His Political Capital on Tax Cuts Now” Larry Kudlow is a senior contributor at CNBC, and also co-author with Brian Domitrovic of the new book JFK and the Reagan Revolution: A Secret History of American Prosperity, December 24, 2016, http://www.realclearmarkets.com/articles/2016/12/24/trump_must_spend_his_political_capital_on_tax_cuts_now_102482.html Yet with less than a month until the inauguration, it is crucial that Mr. Trump embarks on immediate bipartisan efforts to strengthen the economy. It was the number-one election-year issue. And despite strong post-election increases in business and consumer-confidence -- along with the stock rally -- the economy is weakening yet again. Measured year-to-year, real GDP is rising only 1.7 percent. Business fixed investment continues to decline. Productivity is flat. Consumer spending has barely risen in the last two months, while both auto production and sales are slumping. Non-financial domestic profits have declined year-to-year for the last six quarters. Of all these factors the slump in business fixed investment is the most harmful. If you go back in history, across the four long post-war recoveries of the '60s, '80s, and '90s, BFI averaged nearly 7 percent. In the Obama recovery, BFI was only 4 percent. Over the past two years, it has been flat. Using a back-of-the-envelope rule of thumb, if the JFK/Ronald Reagan/Bill Clinton investment performance were in place now, our economy would be growing at 3 rather than 2 percent. A big difference. That's why pro-growth tax reform is so important. It is reported that Mr. Trump will immediately move to overturn costly Obama regulations, especially on small business. This is good. It will add to growth. But the big decision will be whether to repeal and rewrite Obamacare or enact tax reform as the first order of legislative business. Replacing Obamacare is hugely important, both to improve our health-care system and remove the economic drag of its taxing, spending, and regulating. But business tax reform -- with low marginal corporate rates for large and small companies, easy repatriation, and immediate expensing for new investment -- will have an enormously positive impact on the weakest part of our economy, namely business investment. That's where we'll see 3 or 4 percent growth, higher productivity, more and better paying jobs, and fatter family pocketbooks. If there were a way to combine a two-year budget resolution with reconciliation instructions (51 Senate votes) to reform health care and taxes in one full sweep, that would be ideal. However, if tax reform (be it business or individual) comes second, and the start dates are postponed until 2018, then businesses and consumers will postpone economic activity. That could make 2017 a much weaker economic story than confidence surveys and the recent stock market suggest. There's a great transition going on, but the economy needs immediate attention. Tax reform is the key. High corporate taxes ensure slow growth and hinders competitiveness in the long term- additionally an alt cause to 1AC economy impactWhiting 16— Tori Whiting, Research Assistant in the Center for Trade and Economics at The Heritage Foundation, August 4th, “Soaring Business Taxes Hurt America’s Ability to Compete,” The Daily Signal, http://dailysignal.com/2016/08/04/soaring-business-taxes-hurt-americas-ability-to-compete/, Date Accessed: 8-29-16 As a result, the U.S. now has the highest corporate tax rate in the developed world, exceeding the Organization for Economic Cooperation and Development average by nearly 15 percentage points. By maintaining such a high corporate tax rate, the United States hinders its competitiveness in the global economy. In 1993, the U.S. corporate tax rate was increased from 34 to 35 percent, where it has remained since. Corporations in the U.S. also are subject to state and local taxes, resulting in a combined average corporate tax rate of 39 percent. In contrast, Estonia, for example, has decreased its corporate tax rate by 6 percentage points since 2005. Hong Kong has a simple and efficient tax system, and a top corporate tax rate of only 16.5 percent. According to Curtis S. Dubay and David R. Burton, research fellow and senior fellow at The Heritage Foundation, respectively, the current business tax system is “slowing investment, which depresses economic growth, slows job creation, and suppresses wages.” These problems are reflected in Heritage’s 2016 Index of Economic Freedom, where the U.S. is ranked 154th out of 178 countries in fiscal freedom. In June, House Republicans released a blueprint for tax reform, which included proposals to change the way the government taxes corporations and other businesses. Reforms clearly are needed. In the end, reforming the corporate tax rate is about making America a place where domestic and foreign businesses can invest, grow, and prosper while supporting jobs right here at home. Corporate tax reform key to solve inversions – that’s vital to foreign markets and overall US econEdwards, 15 --- Chris, Director of Tax Policy, Cato Institute, White Paper, https://object.cato.org/sites/cato.org/files/pubs/pdf/policy-priorities-white-paper-114th-congress-update.pdf#page=49 These issues are highlighted by the trend toward inversions, which occur when U.S. companies merge into foreign parent companies. Inversions are designed not only to reduce the harm of our high corporate tax rate, but also to avoid the punitive U.S. treatment of corporate foreign earnings. While we tax the global profits of U.S. companies, most countries have territorial tax systems that tax their firms’ domestic profits but do not tax foreign active business income. Suppose that a U.S. company is competing in the Chinese market against a firm based in Britain. Britain has a 21 percent corporate tax rate and a territorial system, so the U.S. company will be at a disadvantage and may lose sales. That is important for the U.S. economy because domestic jobs depend on U.S. corporations succeeding in foreign markets. As U.S. firms expand abroad, they tend to boost exports from their U.S. operations, and they tend to employ more high-paid people in headquarters-related activities, such as management, marketing, and research. By adopting a territorial tax system and a lower tax rate, policymakers would make the United States a better place for corporations to locate their headquarters, to build factories, and to hire high-skilled workers. All this points to the need for Congress to slash the corporate tax rate. The first step should be a simple rate cut from 35 to 25 percent. That step would probably not lose the federal government any revenue over the long run, as discussed below. The second step should be to cut the rate further to 15 percent. This second step should be matched with reductions to unjustified tax breaks and with spending cuts. Tax reform would boost the econ and doesn’t create partisan backlashLong 16— Heather Long, is CNNMoney's senior markets and economy writer, Prior to joining CNN, she was an assistant editor at The Guardian and a deputy editor at The Patriot-News in Harrisburg, Pa., which won a Pulitzer Prize for local reporting, started her career at investment advisory firm Cambridge Associates and holds a master's degree in financial economics from Oxford University, where she was a Rhodes Scholar, 2016 (“How to revive the U.S. economy”, CNN, May 17th, http://money.cnn.com/2016/05/17/news/economy/us-economy-trump-clinton/index.html, Accessed 07-14-2017 // GHS-JK) 1. Corporate tax reform "Our tax system is extremely uncompetitive internationally," says Lynn Reaser, chief economist at the Fermanian Business and Economic Institute at Point Loma Nazarene University. It's so bad that U.S. businesses have moved overseas just to lower their tax bills. The top marginal U.S. corporate tax rate is 39%. The next highest rate in the west is France with a 34.4% top corporate rate, according to the Tax Foundation. The worldwide average is under 23%. On top of that, the U.S. has a very complex system of credits and deductions. Reaser argues that lowering tax rates is "probably the fastest short-term boost we could deliver for the economy." Mark Hamrick, the Washington bureau chief of Bankrate.com, believes corporate tax reform has the "greatest opportunity for bipartisan support" next year. Reducing tax costs spurs economic growth and job creation- additionally there’s no Republican backlashR-Views 14— Republican site that explains common policies endorsed by Republicans, 2014 (“Republican Views on the Economy”, Republican Views, May 24th, http://www.republicanviews.org/republican-views-on-the-economy/, Accessed 07-13-2017 // GHS-JK) A good deal of the reason that the U.S. is not able to adequately compete in a global market is because American businesses face the world’s largest corporate tax rate. This reduces competitiveness worldwide, and encourages the outsourcing of jobs. It also forces U.S. businesses to maintain lower wages, and lessens the creation of jobs. In order to allow greater success in the international market, Republicans propose lowering the corporate tax rate. They would also like to see a permanent research and development tax credit, and a repeal of the corporate alternative minimum tax. They also suggest that the National Commission on Fiscal Responsibility and Reform and the current President’s Export Council switch to a territorial system of corporate taxation. This would allow profits earned and taxed abroad to be repatriated for job-creating investment in America without penalty. Every $1 billion in American exports can create 5,000 jobs here at home, so fostering the international market is crucial to the recovery of our economy. The downside to the current boom in international trade is that some nations are limiting American access to their markets while simultaneously stealing our designs, patents, brands, know-how, and technology. The current administration has done little to battle this violation. Republicans believe in insisting on full parity in trades with countries such as China, who have been participating in unfair trade practices. They wish to impose countervailing duties if these countries will not change their policies regarding American trade. They also seek to restore the presidential Trade Promotion Authority. This calls for votes in Congress on ant new trade agreement, without the interference of outside interests. They also seek the completion of negotiations for a Trans-Pacific Partnership, which would open new and rapidly growing Asian markets to the United States. The 2012 Republican Party Platform states that, “we envision a worldwide multilateral agreement among nations committed to the principles of open markets.” One economic policy that is widely associated with the Republican Party is that of President Ronald Reagan, also known as Reaganomics. This term was used by supporters of the policy and those who opposed it alike. Reagans policy included calling for widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets. It is largely based on the principles of supply-side economics and trickle-down economics. These theories propose that cutting taxes, particularly for larger corporations, will stimulate the growth of the economy as a whole. If corporations save money, these savings will “trickle down” the economic ladder, spur economic growth, and benefit all Americans in the end. The plan is politically supported by Republicans but small conflicts of interests possibleJagoda 17— Naomi Jagoda, Tax reporter for The Hill, UPenn alum, 2017 (“Five tax reform issues dividing Republicans”, The Hill, May 29th, http://thehill.com/policy/finance/335346-five-tax-reform-issues-dividing-republicans, Accessed 07-14-2017 // GHS-JK) Republicans agree that they want to lower tax rates. But tax plans put forward by House Republicans and the White House diverge on how low to set tax rates for both individuals and businesses. The tax plan the Trump administration unveiled in April proposes individual tax brackets of 35 percent, 25 percent and 10 percent. It also proposes a rate of 15 percent for both corporations and small businesses known as “pass throughs” whose income is taxed through the individual tax code on their owners’ returns. Meanwhile, the blueprint House Republicans released last year would establish individual tax rates of 33 percent, 25 percent and 12 percent. The corporate tax rate would be 20 percent, while pass-through businesses would pay a maximum rate of 25 percent. Republicans argue that lowering the corporate tax rate is particularly important because the current rate of 35 percent is among the highest in the world, making American businesses less competitive. 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