Comprehensive Business Tax Reform

Silicon Valley is a major driver of the U.S. economy through using innovation to create direct and indirect U.S. jobs.  Silicon Valley’s success helps grow our nation’s economic success.  Addressing business tax reform will ensure our continued economic growth and is a defining factor in determining where America’s leading global companies decide to locate and grow jobs.

As technology and our economy changes, our tax code must follow suit.  Many prominent U.S. based businesses, such as Apple, Google, Facebook, Tesla, and many others, did not exist when our tax code was last rewritten in 1986.  Updating the tax code, in a smart and effective manner, will make substantial progress towards reclaiming America’s global economic leadership.

An upgraded tax code, with lower rates and an enhanced Research and Development Tax Credit, are key factors to leading economic growth. As tax reform is considered, the fair application of competitive business tax rates is critical for spurring domestic business investment and job creation regardless of the structure of the business.  The U.S. needs a modernized tax structure that will help America’s global businesses create jobs and grow the nation’s innovation economy. Silicon Valley competes in a worldwide marketplace.  It is time America had a world-class tax system to stimulate new jobs and new industries across the U.S.

Tax Principles for Federal Tax Reform

The Silicon Valley Leadership Group has a legacy of advocating for responsible tax reform and continues to hold this position. Reforming the tax code will spark economic growth by allowing U.S. companies to compete fairly in the international marketplace, increase innovation and invest in American jobs.

The Silicon Valley Leadership Group supports the following tax principles:

  • Lowering Taxes. We support lowering the United States corporate tax rate.

The United States corporate tax rate is out-of-date, uncompetitive, and inhibits American companies from competing in both the international and innovation economies. While foreign companies have benefited from lower foreign tax rates, U.S. companies are subject to a tax rate of 35%, which is the highest among OECD countries, where the average is 25%. For the U.S. economy to grow, the corporate tax rate must be reduced.

  • Enact a Territorial Tax System. We support a territorial international tax system.

Currently, the United States is one of a small handful of developed countries that taxes corporate earnings on a global basis, which means that a U.S. company’s foreign earnings are subject to U.S. taxation, despite the fact that those earnings have already been taxed overseas. This double taxation, combined with a high corporate rate, dissuades many companies from investing foreign earnings in the United States. As a result, we lose the opportunity to create jobs and boost our economy. A territorial international tax system, combined with a lower rate, would remove the legal barriers that prevent foreign earnings from being used for domestic investment without penalty.
Facilitate Cross Border Trade. Any comprehensive tax reform plan should make it easier for companies to conduct business globally. We do not support a Border Adjustment Tax or erection of other barriers to cross border trade.

  • Empowering Repatriation. We support reducing the tax rate for repatriated earnings.

U.S. based companies have foreign earnings that are trapped overseas due to high cost barriers established by the United States tax code. Lowering the repatriation tax enables U.S. companies to bring those profits back and allows international earnings to be invested in America. The current high tax rate has led to practices such as earning stripping and inversions, and creates disincentives to invest foreign earnings in America.

  • Igniting Innovation. We support tax policies that promote research and development such as a lower tax rate for income derived from intangibles and intellectual property.

For the United States to continue to be the most innovative nation in the world, the federal government must support businesses in carrying out effective research and development work, patenting new inventions, increasing their intellectual property footprint, and maintaining a competitive edge against foreign innovators.

  • Research and Development. We support the Research and Development Tax Credit and ensuring its vitality through increasing the Alternative Simplified Credit to match the Regular Research Credit, keeping the credit permanent and expanding the rate of the credit.