Corporate Taxes: There are concerns that America now is at a competitive disadvantage in some of these areas.4 After the U.S. cut corporate taxes in the 1980s, other industrialized nations cut taxes even further. When state corporate taxes are taken into account, the U.S. corporate statutory rate of 39.3 percent is third highest among OECD nations, which have a median rate of 33 percent.5 What’s more, the tax codes of countries such as Germany, Singapore, Malaysia, and China favor investment in certain industries through such incentives as 10-year tax holidays. While U.S. states offer such tax breaks, the federal government does not. The U.S. is one of the few major trading nations with a tax code that does not treat investment in globally traded industrial activity any differently than non-mobile activity.6 This means “inefficiency and biases in the corporate tax code fail to promote the productivity and innovative capability of businesses in America, hampering the economy and indirectly affecting all Americans.” 7 Business advocacy groups argue that executives find the current tax burden to be an impediment to the competitiveness of their companies operating in the United States.”8
Infrastructure: Some analysts regard America’s aging infrastructure as a competitive disadvantage.9 The U.S. ranks only No. 27 in terms of infrastructure, according to the World Economic Forum, a major factor in America’s falling place in the WEF’s overall global competitiveness rankings.10 That compares to seventh place in 2000, observes the McKinsey Global Institute.11 The American Society of Civil Engineers asserts that most of America’s infrastructure is in poor shape due to delayed maintenance and lack
Software Alliance and IDC, 08 Piracy Study, May 2009, (http://portal.bsa.org/globalpiracy2008/studies/globalpiracy2008.pdf).
4 It is important to note that the Committee did not conduct a study comparing the U.S. tax system to that of other countries. The Committee did want to draw attention to the growing body of evidence that, in some cases, U.S. tax policy creates a less competitive environment.
5 Congressional Budget Office, op. cit., citing data from Devereaux, Griffith, and Klemm.
8 Roth, et al, “2010 Global Manufacturing Competitiveness Survey,” Deloitte Touche Tohmatsu and U.S. Council on Competitiveness, June 2010.
9 For an analysis of the positive link between good infrastructure and innovation and development, see Tony Ridley, Lee Yee-Cheong, Calestous Juma. “Infrastructure, Innovation, and Development,” International Journal of Technology and Globalisation, Volume 2, Number 3-4/2006, Pages 268278. For an industry view, see the interview with Eric Spiegel, the president and CEO of Siemens Corporation in Harvard Business Review, “Investing in Infrastructure Means Investing in Innovation.” March 15, 2012.
10 World Economic Forum, Global Competitiveness Report, op. cit.
11 James Manyika, et al., Growth and Renewal in the United States: Retooling America’s Economic Engine, McKinsey Global Institute, February 2011, (http://www.mckinsey.com/mgi/publications/growth_and_renewal_in_the_us/pdfs/MGI_growth_and_renewal_in_the_us_full_report.pdf).