Economy & Budget

Business Leaders Explain How to Create Jobs

Human Events and economics writer Donald Lambro asked America’s major business associations, many chief executive officers and top economic analysts to name the three best ways to create jobs and expand the U.S. economy. Here are their answers.

National Association of Manufacturers

NAM President and CEO John Engler: “Here are NAM’s proposals to create new jobs:”

1.  “A pro-manufacturing tax policy must first acknowledge that when Congress raises taxes, it makes manufacturers in the U.S. less competitive. Reduce the corporate tax rate to 25% or lower without imposing offsetting tax increases.” Result: 2 million new jobs before the end of this decade.”

2. “Enact tax provisions that will stimulate investment and recovery, including: Strengthen and make the R&D tax credit permanent. The Milkin Institute’s ‘Jobs for America’ analysis reported that increasing the R&D tax credit by 25% would enhance U.S. innovation, boosting GDP by $206 billion and creating 270,000 manufacturing jobs.”

3. “Promote a job-creating trade policy that opens global markets, reduces regulatory and tariff barriers and reduces distortions due to currency exchange rates [and] ownership restrictions. Enact pending trade agreements and negotiate additional agreements in the Pacific area and elsewhere.”

Frederick W. Smith, chairman and chief executive of Fedex Corp.

1. “Allow businesses to accelerate depreciation of capital purchases more quickly. The Institute for Policy Innovation has estimated that every dollar in tax cuts for business depreciation adds about $9 in GDP growth. Over the past 60 years, there’s been a strong correlation between domestic job growth and business investment. Any policy that permanently allows businesses, particularly manufacturers, to expense capital purchases in the year they are made will go a long way toward putting more investment funds—and consequently more jobs—into the marketplace.”

2.  “Lower the corporate tax rate. Study after study concludes that lower tax rates help attract and retain increasingly mobile international capital and help create jobs. But the United States’ corporate tax rate is not competitive in the world market.”

“Our combined federal and state statutory rate of 39% is 50% higher than the average 26% rate of all other OECD (Organization for Economic Co-operation and Development) countries. According to the Cato Institute, our effective tax rate of 35% is almost double the 18.2% effective rate of 80 countries surveyed. Yet other countries continue to lower their rates. For example, earlier this summer, the U.K. cited global competitiveness as a reason for considering further reductions to its current rate of 28%.”

“The U.S. must reduce its corporate income tax rate to 25% or less to remain competitive. That would mean businesses can plow more of their money back into equipment, training, infrastructure and other areas that add jobs to the economy.”

3.  “Embrace open trade. The biggest economy in the world is the economy of world trade. To raise the U.S. standard of living, our job growth and our access to some six billion consumers in countries such as China, India and Brazil, we must embrace policies that promote open trade. After all, 27% of our American economy is based on international trade.”

“Right now, agreements with Panama, Korea and Columbia, which would open these markets to U.S. businesses, are held up in Congress. We need to get these agreements approved and, in general, develop trade policies and agreements that open America to more and more markets around the world. We simply cannot increase income in America if we are not in the middle of the global marketplace.”

The National Association of Wholesalers and Distributors

1. “Take the threatened tax increases off the table. The tax increases threatening businesses are huge, especially damaging to the thousands of small businesses which file as individuals. The automatic increases in tax rates on upper-income earners, dividends and capital gains are already a huge disincentive to business activity, and the Obama Administration’s proposals for additional tax increases aimed directly at business seriously compound the problem.”

2.  “Impose a moratorium on new regulations. Many executive branch agencies, most particularly those within the Department of Labor, have embarked on what seems to be a vendetta against American businesses, threatening them with dozens of new and costly regulations.”

“OSHA is particularly aggressive and offensive, proposing costly and cumbersome new regulations based on their assumption that businesses will ignore workplace safety unless and until they are inspected.”

3.  “Repeal the unnecessary healthcare mandates and do something that will actually lower healthcare costs: The new healthcare law is replete with new employer costs and mandates. Congress should repeal many of the mandates, starting with the onerous 1099 filing requirement and the newly proposed rules that threaten the grandfathering of existing healthcare plans. Go back to the drawing board, and enact meaningful healthcare reform that will actually bend the much-discussed cost curve down, rather than driving costs continually upward.”

U.S. Chamber Of Commerce

“Uncertainty is the enemy of growth, investment and job creation,” the three million member U.S. Chamber of Commerce declared last week in a public letter to President Obama and Congress.

“Through their legislative and regulatory proposals—some passed, some pending and others simply talked about—the [Democratic] congressional majority and the administration have injected tremendous uncertainty into economic decision-making and business planning,” the letter said. Here are the chamber’s top four proposals to foster new job growth and economic expansion:

1.  “Moving toward a competitive tax structure that creates certainty for businesses by temporarily extending all of the tax relief passed in the prior decade and reducing the U.S. corporate tax rate. In one bold, swift move, this would substantially boost investor, business and consumer confidence and would infuse our economy with fresh momentum.”

2.  “Controlling the rising deficits and debt by generating additional federal revenues and restraining spending. As much as $1.7 trillion in revenue could be generated over 10 years through numerous oil, gas and shale leases on our lands and off our shores.”

3. “Expanding trade by passing the pending free trade agreements with Columbia, Panama and South Korea will protect at least 380,000 U.S. jobs that are at risk if Washington fails to act.”

4.  Regulatory Overkill: “Taken collectively, the regulatory activity now underway is so overwhelmingly beyond anything we have ever seen that we risk moving this country away from a government of the people to a government of regulators,” Chamber President Thomas J. Donohue said in a speech last week before a Chamber-sponsored Jobs Summit. He called on the Obama Administration and Congress “to immediately put a stop to the cascade of new regulations that is the principal reason businesses are so reluctant to make investments and create jobs.”

National Federation of Independent Business

1.  “Extend the Current Individual Tax Rates. Most small businesses pay taxes on their business income at the individual tax level. With the lower individual rates set to expire at the end of 2010, Congress should extend the current rates and ensure that no small business faces a tax increase.”

2.  “Estate Tax and Capital Gains Tax Relief. With the phased-out estate tax and lower capital gains rates set to expire at the end of 2010, Congress should extend that relief.  Protecting small business owners from the return of the estate tax next year, will provide immediate relief to many family-owned businesses.  The current lower capital gains rates should also be extended to promote more investment and protect business owners from facing a tax increase on the sale of any capital investments.”

3.  “Washington needs to end the threat of job-killing policy proposals, such as cap and trade and card check. Small businesses are faced with tremendous uncertainty and are struggling to recover from the recession. Hearing that Washington may pass more changes that will increase the cost of doing business is keeping many business owners on the sidelines.”

Lawrence Kudlow, Wall Street economist and CNBC business analyst

1.  “Full cash expensing for all business investment is the single best economy and jobs grower.  Best bang for the buck, yielding almost $10 of new GDP for every dollar of tax write-off.”

2.  “Reduce the corporate tax rate to 20% from 25%, and make Sub S businesses along with LLCs (unincorporated companies) and C corporations eligible for this.”

3.  “Cease all tax hikes for two years, until full-fledged tax reform can take place to flatten rates and simplify the tax code.”

4.  “Appoint a grown-up senior business executive to a top economic position in the Obama White House.”

Arthur B. Laffer, chairman of Laffer Associates

1.  “We should move toward a true flat tax where income taxes, corporate taxes, payroll taxes, Medicaid taxes and all those other taxes will be eliminated in favor of two flat-rate taxes of 11% on business net sales (value added) and personal unadjusted gross income (with some deductions). A true flat tax with a rate of 11% would be static revenue positive by about 3% of GDP and would spur enormous economic growth.”

2.  “Once a flat tax is put into law, we should also have a federal, state and local tax amnesty program to bring tax cheats into compliance with the new tax codes.  The estimates are that such a tax amnesty program would raise a one-time amount of somewhere between $600 billion and $800 billion, and $50 billion annually on an on-going basis.”

3.  “Additionally, the Federal Reserve should do what needs to be done to return to a responsible monetary policy. This entails selling upwards of $1 trillion in Fed assets to contract bank reserves back to where total reserves are approximately equal to required reserves. Such actions will help ensure a stable value of the dollar going forward.”

“Tax reform, along with spending restraint, sound money, free trade and a rational regulatory policy would lead to a period of exceptional prosperity and asset appreciation. There’s no better way to increase jobs than to create a pro-growth economic environment.”


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