One of the biggest pitfalls of our existing tax code is that it incentivizes American companies to relocate or be acquired by foreign firms.
These so-called inversions have become increasingly common under the current tax system, especially as other developed countries lowered their corporate tax rate and shifted to systems that no longer tax foreign earnings. Since 1982, more than 85 American companies have moved overseas because of our unfair tax system. In 2014 alone, 10 American firms with $319 billion in total assets relocated to countries with more competitive tax systems. Reforms the President and Congressional leaders outlined in September would fix this imbalance by lowering our corporate tax rate and reducing the taxes American businesses are forced to pay on foreign earnings.
"It matters because we have to be competitive with the rest of the world. When we look at the rest of the developed world today, the average rate is in the low twenties." - Gary Cohn, National Economic Council Director