Emergency Committee For American Trade

ECAT Urges Rejection of Tax Changes that Will Undermine U.S. Competitiveness Overseas

Proposed Limits on Deferral Ignore the Value of Overseas Investment and the Effects of the

Anomalous U.S. Tax Code

Washington, D.C., May 5, 2009: Calman J. Cohen, President of the Emergency Committee for American Trade (ECAT), issued the following statement after the Administration’s announcement of further details on its international tax proposals:

“The Administration’s proposals to limit deferral and make other changes to the international tax code would undermine U.S. engagement in the international economy, hurting the U.S. economy, U.S. companies and their U.S. workers. Contrary to the assumptions that seem to underlie the Administration’s proposals, U.S. investment abroad is not a substitute for activity in the United States, but largely complements and enhances the economic opportunities created in the United States. Study-after-study over the past 20 years has documented that U.S. companies that invest abroad have:

§ exported more,

§ expended more on U.S. research and development and physical capital investments in the United States, and

§ paid their U.S. workers more

than companies not engaged globally.

“The U.S. international tax system is increasingly isolated from the systems of other developed countries, to the disadvantage of U.S. companies and their U.S. workers. The Administration’s proposal also ignores the significant taxes that U.S. companies pay abroad and the fact that the U.S. corporate tax rate is the second highest of all industrialized countries.

“Deferral and other provisions of the U.S. tax code are vital to protect U.S. companies and their workers from a highly anti-competitive tax burden that would otherwise result from the differential tax systems in place in the United States and around the world. With deferral, U.S. companies can compete in foreign markets on a level playing field with their foreign counterparts. Without deferral, as the Administration is largely proposing, the playing field would be tilted very much in favor of foreign competitors, to the disadvantage of U.S. companies and their U.S. workers.

“ECAT strongly urges that proposals to limit deferral be rejected and that the Administration and Congress focus much-needed attention on enacting reforms to the U.S. tax code that will enhance U.S. competitiveness in the international economy.”

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Founded in 1967, ECAT is an organization of the heads of leading U.S. international business enterprises representing all major sectors of the American economy. Their annual worldwide sales total approximately $2.7 trillion and they employ more than six million persons. ECAT’s purpose is to promote economic growth through the expansion of international trade and investment.

Attached Document(s): 05-09 ECAT Urges Rejection of Tax Proposals that Undermine International Competitiveness.pdf