Could Tax Reform Boost Business Investment and Job Creation?

Testimony Before the Joint Economic Committee

By Seth Hanlon | November 17, 2011

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SOURCE:Center for American Progress

CAP Director of Fiscal Reform for the Doing What Works testifies before the Joint Economic Committee. Read the testimony. (CAP Action)

Thank you, Chairman Casey, Vice-Chairman Brady, and the members of the committee for the chance to appear today to discuss tax reform and the economy.

There is wide agreement that the tax code is long overdue for reform. Our current tax code is inefficient, overly complex, and unfair in myriad ways. Our tax code is also failing at its most fundamental purpose, which is to raise sufficient revenue to meet our needs as a country in an equitable way. Fundamental tax reform—a reform that broadens the tax base and eliminates economic distortions—is important for promoting long-term economic growth.

That said, tax reform simply cannot address the central economic challenge facing the United States right now—the severe and prolonged jobs crisis, which is a product of the lack of demand in the economy. At a time of 9 percent unemployment and vast unused resources, Congress should be focused above all else on boosting demand, reducing unemployment, and putting our economy back on a path toward healthy economic growth.

And so my testimony today will summarize briefly the reasons why I believe that fundamental tax reform is an important priority, but one that should not derail immediate and fast-acting measures to address our most pressing challenge—putting people back to work. My testimony will then discuss some of the critical issues and principles in tax reform, including:

• The fiscal context for tax reform
• The need to avoid tax policies that would shift a greater share of the tax burden on middle-class families
• The need for business tax reform that encourages investment and job growth in the United States, levels the playing field among competing businesses, and ensures that companies pay their fair share

Seth Hanlon is Director of Fiscal Reform for the Doing What Works project at American Progress.

CAP Director of Fiscal Reform for the Doing What Works testifies before the Joint Economic Committee. Read the testimony. (CAP Action)