The Pearland Journal: Pauken speaks about the onerous corporate tax and American jobs

By KRISTI NIX

Texas Workforce Commission Chairman Tom Pauken said Thursday (Sept. 29) that America has seen zero private-sector job growth over the last decade due to the national corporate tax structure.

“The current U.S. corporate tax system basically exports American prosperity and jobs overseas and we need to change that,” Pauken said in an exclusive interview with The Journal. “We have the most onerous corporate tax system in the world and so over the last decade there has been zero private-sector job growth in the country.

“During that time, we lost one third of our U.S. manufacturing base, that’s five and a half million good American jobs that have gone away,” he said. “And it’s not just China and Mexico. Germany, which has a high wage structure has a strong manufacturing sector, is running trade surpluses while we’re running massive trade deficits.”

“China has a 17 percent tax advantage over us; Mexico has a 16 percent tax advantage. All of these nations enjoy an on average an 18 percent tax advantage over us and so we’ve become the dumping ground. And it’s a real incentive for larger companies in particular to move jobs overseas, which is what is happening.”

On average, American businesses and manufacturers pay a 35 percent corporate tax rate, almost twice the rate of most foreign countries.

Using Germany as an example, Pauken argued other countries held an unfair advantage over the U.S. under the current tax structure.

“If a U.S. made Cadillac priced against a comparably priced Mercedes Benz is exported to Germany, it has to pay 35 percent corporate income tax and 7.65 percent employer portion of the payroll tax. Then on top of that, you’re hit with a 19 percent border-adjusted consumption tax,” he said. “Germany manufacturers then hold an advantage because a German vehicle coming into the U.S. does not have to pay our corporate taxes. We have no border-adjusted consumption tax and they get a credit against their consumption tax back home; so it’s a real incentive to locate factories in Germany and not in the U.S.”

According to Pauken, the corporate tax structure should be changed in order to save American jobs and creating a fairer playing field for U.S. businesses.

“The real problem is when you’ve got such an onerous corporate tax system like we do in the U.S., what happens? Companies have to figure out a way to make it work. So you’ve a lot of big companies, for example, that have money parked overseas that could be brought back if we had the right tax system.

“But they are not going to do that if there is a 35 percent tax rate,” he said. “If you change the way we tax business; replace the current system with a revenue neutral eight percent border adjusted business consumption tax, all of a sudden the playing field becomes level.”

Article originally appeared here.

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