Outside of the anomaly of California, the results of the election two weeks ago showed that people were very concerned about jobs, namely, the lack of jobs in the United States and the loss of jobs due to outsourcing offshore in Asia.\u00a0 Our economy is limping along at monthly average of a 1.5 percent growth rate in our Gross Domestic Product (GDP), which isn\u2019t enough to create the amount of jobs we need.<\/p>\n
TV news shows, radio talk shows, newspapers, and magazines are now filled with the opinions of pundits on what we need to do to solve the \u201cjobs\u201d problem and kick-start the economy.\u00a0\u00a0 Until the majority of these experts face up to the fact that manufacturing is the foundation of our economy and realize that we must save American manufacturing to provide the higher paying jobs we need, their numerous ideas and recommendations will fall short of solving the problem.<\/p>\n
There is a broad spectrum of ideas and recommendations on how we can save American manufacturing presented in my book Can American Manufacturing be Saved?\u00a0 Why we should and how we can<\/a>. <\/em> These ideas and recommendations range from extreme protectionism to reasonable and realistic recommendations.\u00a0\u00a0 What can we do right now that will have the most impact on helping American manufacturers and create jobs?<\/p>\n First, we need to stop the bleeding.\u00a0 By this, I mean we need to put an end to tax policies and laws that are hurting businesses and keeping them from hiring people.\u00a0 The lame duck Congress needs to stop talking about \u201cextending the Bush tax cuts\u201d and do something about preventing tax hikes from going in effect January 1, 2011<\/strong>.\u00a0 These tax hikes include raising the capital gains tax, eliminating the R&D tax credit, and raising the Death Tax back up to 55 percent, all of which would be the most harmful to businesses, especially manufacturers.\u00a0 Paying higher taxes leaves companies with less money to hire new people.\u00a0 Paying more taxes keeps people from buying goods they want vs. need, which will stimulate the economy and create jobs.<\/p>\n The National Association of Manufacturers<\/a> has long recommended that the cost of tax complexity and compliance be reduced, focusing on provisions that are particularly complex for manufacturers, such as depreciation calculating cost of good sold, and the corporate alternative minimum tax.<\/p>\n A 121-page report titled \u201cApproaches to Improve the Competitiveness of the U. S. Business Tax System for the 21st<\/sup> Century<\/a>\u201d was released on December 20, 2007 by the U. S. Department of the Treasury and could be used to start reforming our tax system.<\/p>\n In the 1980s, the United States had a low corporate tax rate compared to other countries, but now has the second highest.\u00a0 Japan has had the highest corporate tax rate at 39.54 percent, but the new government has proposed reducing Japan\u2019s corporate tax rate down to 25 percent.\u00a0 If this reduction goes through, the United States corporate tax rate would be the highest at 39.1 percent<\/a> (when combining federal and the average of state taxes.)\u00a0\u00a0 Other countries are continually changing their tax systems to gain competitive advantage.\u00a0 According to the Organization for Economic Cooperation and Development<\/a> (OECD), Ireland\u2019s tax is lowest at 12.5 percent while most of the other major industrial nations have corporate tax rates ranging from 19 to 30 percent.<\/p>\n The Treasury Dept says, \u201cAs other nations modernize their business tax systems to recognize the realities of the global economy, U. S companies increasingly suffer a competitive disadvantage. The U. S. business tax system imposes a burden on U. S. companies and U. S. workers by raising the cost of investment in the United States and burdening U. S. firms as they compete with other firms in foreign markets.\u201d<\/p>\n The study concludes that the current system of business taxation in the United States is making the country noncompetitive globally and needs to be overhauled.\u00a0 A new tax system aimed at improving the global competitiveness of U. S. companies could raise GDP by 2 percent to 2.5 percent.\u00a0 Rather than present particular recommendations, the report examines the strengths and weaknesses of the three major approaches presented.<\/p>\n The Executive Summary also comments on the importance of the individual income tax rates because roughly 30 percent of all business taxes are paid through the individual income tax on business income earned by owners of flow-through entities (sole proprietorships, partnerships, and S corporations).\u00a0\u00a0 These businesses and their owners benefited from the 2001 and 2003 income tax rate reductions.\u00a0\u00a0 This sector has more than doubled its share of all business receipts since the early 1980s and plays a more important role in the U. S. economy, accounting for one-third of salaries and wages.<\/p>\n The Executive Summary concludes, \u201c\u2026now is the time for the United States to re-evaluate its business tax system to ensure that U. S. businesses and U. S. workers are as competitive as possible and Americans continue to enjoy rising living standards.\u201d<\/p>\n