The Senate Finance Committee’s 3/16 hearing, “Made in America: Effect of the U.S. Tax Code on Domestic Manufacturing,” spotlighted the critical need to keep America’s corporate tax rate competitive.

In case you missed it, check out some key highlights below:

Massachusetts Institute of Technology Professor Michelle Hanlon: “It Is Very Important That We Endeavor To Maintain A Competitive Corporate Tax Rate”

“Maintaining a competitive corporate statutory income tax rate is an important tax policy objective. As Ranking Member Crapo said in his opening remarks, prior to the Tax Cuts and Jobs Act of 2017 – or the TCJA – the U.S. had a 35 percent corporate income tax rate. It was one of the highest rates in the world. That high corporate income tax rate…led to many negative economic outcomes. For example, there were incentives to move profits to foreign locations. There were incentives to retain high-cash holdings in foreign subsidiaries. And in particular for this hearing, in some cases, our prior tax system led to strong incentives to manufacture outside of the U.S. Currently, our federal corporate statutory income tax rate is 21 percent. According the OECD data, our rate, including state and local income taxes, is estimated to be 25.8 percent. The OECD average is 23.3 percent, and the G-20 average is 26.9 percent. Thus, now we have a competitive domestic corporate income tax rate. But we are by no means a tax haven. My co-authors and I recently surveyed some U.S. companies about the TCJA. We find that almost 90 percent of the C corporations that responded to the survey said that the lower corporate tax rate was important to their company. Indeed, the corporate rate reduction was the key provision of the TCJA that received the highest importance rating in the survey. Furthermore, of the companies that said they increased investment in response to the TCJA, many said they did so because of the reduction in the corporate tax rate… It is very important that we endeavor to maintain a competitive corporate tax rate in order to incentivize economic activity here at home and to avoid the negative economic consequences from the pre-TCJA era.”

Hanlon: The OECD Has Called The Corporate Income Tax The Most Harmful Form Of Taxation

The corporate income tax is generally thought to be an inefficient tax in the sense that it causes a lot of distortions. In fact, the OECD has called the corporate income tax the most harmful form of taxation for economic growth because it discourages job creation and investment. Thus, having a competitive corporate tax rate is important so that the distortionary effects are not too large or too detrimental. And I think we already ran the experiment to some degree of having the highest tax rate in the world and the outcomes were not good.

National Association of Manufacturers’ Jay Timmons: Tax Reform Supercharged American Manufacturers

I can tell you that one of the strongest actions that Congress has taken in the last few years has been to reduce the corporate tax rate…What I hear when I talk to manufacturers all around the country is that that tax reform actually supercharged these companies’ ability to invest in America, hire American workers, and raise wages and benefits.

Hanlon: Raising Our Corporate Tax Rate Will Put Us At A Competitive Disadvantage

Raising tax rates now would be a mistake. If we raise our corporate tax rate to 28 percent, then our combined rate will be 32 to 33 percent. That will again be the highest corporate tax rate in the OECD and I think that would be a big mistake. It will put us at a competitive disadvantage in many respects.

Timmons: Increasing The Tax Burden Will Harm The Ability Of Manufacturers To Grow And Compete

Businesses – manufacturers – absolutely need predictability and stability in the tax code. And we would ask this committee and your colleagues to recognize that fact. And quite honestly, increasing the tax burden – regardless of the objective – will harm the ability of manufacturers to grow and and compete in the modern economy.

Ford Motor Company’s Jonathan Jennings: We Need To Maintain A Competitive Tax Rate

What we need to do is, again, contain our current competitive tax rate and ensure that we do not step backwards because we know that there are other nations that are competitive in that space. And in speaking with our suppliers, because of that competitiveness, they’re actually looking elsewhere outside the U.S. So we need to maintain that competitive tax rate to ensure that we maintain it here in the U.S.