WASHINGTON, Sept. 19, 2012 /PRNewswire-USNewswire/ -- TechNet, the bipartisan policy and political network of technology CEOs that promotes the growth of the innovation economy, today reiterates its call for Congress to seize the bi-partisan opportunity to overhaul the U.S. tax code to help U.S. companies remain competitive in an increasingly global economy.
The following is a statement from TechNet President and CEO Rey Ramsey on the need for tax reform:
"The tech sector is central to America's economic success. We are one of the few industries to produce jobs during the Great Recession and its sluggish aftermath. Every day, the tech sector puts nearly 5.9 million people to work, with an annual average wage of $86,800 -- 93 percent more than the average private-sector wage. And high-tech manufacturing accounts for more than 1.2 million of those jobs.
"We believe as a nation we must do all we can to make sure our policies continue to foster this astounding growth engine for our economy. As such, we continue to believe that the U.S. tax system is outdated, too complex and needs to be modernized to make US companies more competitive in the global market place, and to make the United States a more attractive place to do business. Our competitors have recognized that tax laws are economic development tools, and have revamped their tax codes to fuel more investment, attract more foreign companies, and create more jobs.
"We believe Congress should be looking forward to establish a tax system that keeps the heart of the world's tech sector here in America – along with the millions of jobs and billions of dollars of investment that goes with it. The last major overhaul was in 1986, when the global economy was not as fiercely competitive and integrated as today. Many of the most prominent companies in our country, and certainly in the technology sector, did not exist or existed in a very different form.
"More and more, U.S. tech jobs are dependent upon their companies' success overseas. In 1986, just 13% of U.S. corporate earnings came from abroad. Today that number is over 40%, and, on average, for TechNet member companies, over 60 percent of their revenue is derived from outside the United States, with that percentage increasing every quarter, while on average, over 70 percent of TechNet member companies' research & development is conducted inside the United States. Last year alone, the nation's biggest tech companies invested more than $103 billion in research and development, which lead to new patents, products and jobs.
"Today, the United States has the world's highest tax rate and is one of the few developed countries in the world that that taxes the worldwide income of its domestic corporations. The U.S. also requires worldwide American businesses to pay residual U.S. tax when foreign subsidiary earnings are repatriated back to the U.S., which creates a significant tax burden for U.S. companies, a disincentive for U.S. investment, and compares unfavorably with 26 of the 34 OECD member countries (including recent converts Japan and the U.K.) that offer a permanent tax exemption for the repatriation of foreign subsidiary profits).
"Fixing the tax code helps businesses large and small. American companies that operate globally directly sustain more than 22 million U.S. jobs and 41 million indirectly. The average U.S. company operating globally buys $3 billion in goods and services from small businesses here at home, with a cumulative impact of more than $1.52 trillion. Ending the double-taxation on profits earned by multinationals overseas will result in greater partnerships and opportunities for small businesses here at home.
"Expansion abroad by U.S. tech companies is vital for establishing export platforms for 'Made in America' goods and expanding the scope of domestic investments in research and other high-paying headquarters' operations. Economic analyses show that foreign operations of U.S. companies are complementary to their domestic operations -- operations abroad expand operations at home. A competitive American territorial tax system should broadly follow the practice of our trading partners and make the U.S. tax system more competitive with our major trading partners.
"We agree with both President Obama's Council on Jobs and Competitiveness and his Export Council that the U.S. should reform its tax rules to support the ability of worldwide American businesses to compete in global markets and invest in the U.S., and urge Congress to look forward and work on reforming the tax code."
TechNet is the national, bipartisan network of CEOs that promotes the growth of technology industries and the economy by building long-term relationships between technology leaders and policymakers and by advocating a targeted policy agenda. TechNet's members represent more than one million employees in the fields of information technology, biotechnology, e-commerce and finance. TechNet has offices in Washington, D.C., Palo Alto, Sacramento, Seattle, Boston and Austin. Web address: www.technet.org. You can also follow us on Facebook and Twitter at @technetupdate.