Business group sees payoff in tax reform

Revamping the tax code to help American companies would produce a significant spike for the U.S. economy, according to a new study sponsored by a prominent business group.

{mosads}The National Association of Manufacturers’ study found that, over a decade, a pro-business tax overhaul could bring in some $12 trillion in new economic growth, or about a 0.9 percent increase in gross domestic product each year.

Such a plan would also help create 6.5 million new jobs and increase investment by $3.3 trillion, according to the study from economists at the Universities of Tennessee and Kansas.

To get those figures, the study assumed a tax overhaul would lower the corporate rate to 25 percent, allow companies to fully write off their purchases more quickly, expand and extend the credit for business research and shield most offshore corporate income from U.S. taxation.

Businesses that pay taxes through the individual system, commonly known as pass-throughs, would also get those benefits under the assumptions made by the study.

“These estimated impacts are significant and worthy of consideration in the ongoing discussion about the future of pro-growth tax reform,” the study’s authors wrote.

The study did not, however, seek to offset the costs of those new policies at a time when Republicans are seeking a revenue-neutral tax overhaul and Democrats want to bring in more revenue for the Treasury.

Those costs are also pretty significant: A House bill to indefinitely expand the research credit last year cost roughly $155 billion over a decade.

Donald Bruce of the University of Tennessee, one of the study’s authors, said he and his colleagues didn’t want to be “constrained” by the question of revenue.

“While one goal of that broader effort might be revenue neutrality, there is no need to impose such a constraint on every individual component of a comprehensive tax reform package,” the authors wrote in the study.

Dorothy Coleman of the manufacturers group added that it knew getting rid of tax breaks would be part of any rewrite of the code but wanted to make clear the price of delaying a needed overhaul.

“We are leaving investment, jobs, growth on the table,” Coleman said on a conference call.