And it works. According to the accounting firm RSM-McGladrey, nearly 40 percent of responding mid-sized manufacturers said they utilize the IC-DISC to make their exporting business more competitive. The Rangel tax reform proposal would eliminate this export tool and raise the tax on income from these exports from 15 to 39 percent!
American firms are facing fierce international competition. Repealing a pro-export tax benefit – and raising tax rates on top of it – amounts to unilateral disarmament in the battle for global market share and jobs, especially given that many other countries allow their companies to exempt export income from taxation altogether.
The Rangel plan moves our tax code in the wrong direction, and it sends exactly the wrong signal to those firms who have made a decision to invest and create jobs in this country. Cutting the corporate tax rate – as the Rangel bill proposes – is good pro-growth policy, but it shouldn’t be done at the expense of small unincorporated businesses.