The inauguration of a Republican president and Republican majorities in the U.S. Senate and House of Representatives make the next two years the most promising time for corporate tax reform in decades. Both the new president and the congressional leaders are supportive, listing it as one of the top three priorities for this year. Much of the groundwork on educating members and developing alternative policies has already been done. But what would a pro-growth, pro-innovation, and pro-competitiveness reform bill look like? What components are absolutely necessary as opposed to being preferable? This report provides the Information Technology and Innovation Foundation’s (ITIF’s) take on those questions.
ITIF believes that any bill emerging from Congress must include the following components in order to successfully boost innovation, productivity, and competitiveness:
- A substantially lower corporate statutory rate.
- A maximum rate on foreign profits of 15 percent, with credit for foreign taxes and the elimination of deferred taxes on foreign profits.
- An enhanced research and development tax credit.
- An innovation box.
- Strong incentives for capital investment.
Congress should pass any tax reform that contains these provisions.