Name: Is Bipartisan Politics Stalling Corporate Tax Progress?
Uploaded: 2016-10-12
Duration: 5 min 26 s
Description: Harvard’s Michael Porter thinks so

[ MUSIC ] 33 % of Americans believe the economy is the most important problem facing the country. That's the highest for any single issue according to a recent Gallup poll. And while Hillary Clinton and Donald Trump say they wanna talk about the issues voters care about. The economy wasn't even in the top three, in terms of time spent discussed, during Mondays Second presidential Debate. Joining me now to discuss the economy and the campaign, is Michael Porter, he's a Harvard business professor, and the coacher of the best competitive project. Professor Porter is the co- author of a recent report on US competitiveness, entitled Problems Unsolved and a Nation Divided. Which concludes, quote, we believe that dysfunction in America's political system is now the single most important challenge to US economic progress. Professor Porter, so I'm guessing you didn't hear anything in either the first two debates that gives you any hope that we're gonna have a better conversation about this? No, unfortunately I haven't. And I mean, the second debate was significantly worse than the first debate in terms of the economic content. All the general dialogue is the same it's sort of mutually inconsistent views on whatever economic issues are discussed rather than a more sophisticated, understanding of our problems and what we actually need to get done. And unfortunately this is too important to For these candidates to be talking about it in this way but it's the pattern that our political dialogue has evolved to over the last couple of elections. You wrote that tax reform is the single area with the greatest potential to change a trajectory of the US economy and our competitiveness. Why, and what specifically would you change in the code? Well, I think the most important issue right now is corporate tax policy. The US has a corporate tax policy that's completely out of sync with the rest of the world, and all the other advanced nations. Our corporate tax rate for businesses, the highest of any other country in the OECD And our corporate tax structure, in terms of international taxation, is the only country where you pay taxes twice. You pay them in whatever country you operate in, but then you have to pay them again if you want to bring that money back to the US. And you have to pay the difference between the German tax rate, for example, and the US tax rate. The US tax rate being by far higher than Germany's tax rate and any other tax rate in the world. So essentially, our tax policy is driving investment out of the US, and it's slowing down the rate of investment within the US. And if we wanna get economic growth moving in this country, and if we wanna get jobs restored and growing, We're going have to deal with it from that reality. But the political discussion is made that into a sort of a morality play. And each side is pointing at each other. We've known this for a decade. It's been talked about in congress, we've had proposals that would do what I just suggested. But the two political sides just can't get it done. Now, there was some discussion of taxes at the debate on Monday night. We're getting rid of carried interest provisions. I'm lowering taxes, actually, because I think it's so important for corporations. Because we have corporations leaving, massive corporations, and little ones. Little ones can't form. We're getting rid of regulations which goes hand- in- hand with the lowering of the taxes. But we're bringing the tax rate down from 35 % to 15 %, we're cutting taxes for the middle class. Donald Trump has talked about reforming the corporate tax code, is his prescription right in your estimation? Well, I think his prescription is very simplistic and it's just a massive drop in the corporate tax rate. What good policy says here and I think that most would agree that we've got to drop the rate but we've got to eliminate a bunch of loop holes and deductions, it really make's no sense. More special interest things for individual industries and we know we can drop the corporate tax rate in a revenue neutral way. This is not a give away to corporations. They're gonna pay at least as many taxes as they're paying today with good tax policy but Trump side is just slashed the rate and not worry about the effect on revenue, Hilary Clinton is talking about reducing corporate taxes as well but ultimately we've been talking about this, I think I I learned recently, after looking at the data that, actually the last three Presidencies, going way, way back, everyone in the election has talked about bipartisan cooperation but none has happened. So, there's something structural going on here, this campaign has taken The partisanship and the division and the unwillingness to find common ground and the unwillingness to see the validity in multiple points of view. It's taken that whole atmosphere of the political competition to the extremes that non of us could have possibly imagine. All right, professor Porter, we have to leave it there. Thank you very much. [ MUSIC ]