Sen. Rob Portman, the Ohio Republican who serves on the Senate Finance Committee and exercises considerable influence within the Senate’s Republican caucus, urged his fellow lawmakers to get serious about reforming the U.S. tax code Tuesday, saying that the corporate sector is already being “hollowed out” because of competition from lower-tax countries.
Speaking at a legislative seminar sponsored by the law firm BakerHostetler in Washington, Portman said, “We’re not seeing the kind of economic growth we’ve always seen coming out of a recession.” One of the reasons, he said is that an antiquated tax code that hasn’t been “meaningfully reformed since 1986” is hurting competitiveness.
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Since that time, he said, “every other country” the U.S. competes with has reformed their codes, leading U.S. companies to consider move overseas where their profits are more lightly taxed.
Portman said that the problem has become so entrenched that it is too late to avoid damage to the U.S. economy. All lawmakers can hope to do now, he said, is limit the damage.
“By the time we get to it, which may be two or three years from now probably, to be practical, after a new administration comes in and a new Congress, we’re going to see a hollowing out of a lot of corporations in our country, and we’ll look back and say, ‘What happened?’” he said.
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Portman also threw cold water on the popular suggestion that a change in the way the U.S. taxes the overseas profits of U.S. companies could be used to prop up the finances of the failing Federal Highway Trust Fund. The idea is that lowering the corporate rate from the current 35 percent would induce companies to “repatriate’ profits being held overseas, resulting in a one-time boost in federal revenue.
But Portman pointed out that, with the fund scheduled to run out of money soon, floating ideas about hypothetical tax reform as a means of saving it is pointless.
“Tax reform is not going to happen in the next few weeks,” Portman said. “We need to get this done.”
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