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Morning Brief: U.S. Competitiveness Report Cites Business Fears

by Jonathan Masters
January 19, 2012

U.S. Competitiveness Report Cites Business Fears

The Harvard Business School’s U.S. Competitiveness Project released a major new report that revealed deep concerns among business leaders about the future of the United States as a competitive location for business. The survey of 10,000 global executives found that nearly two-thirds see the United States losing ground to emerging markets. The concerns are broad, including the U.S. tax code, regulations, K-12 education, immigration policies, macroeconomic policies, legal framework, regulations, infrastructure, and workforce skills.

Debt and Deficits

U.S. Mayors Censure Congress

In a new report, mayors from across the United States have expressed their discontent with Congress (Roll Call) for slow economic recovery efforts and cuts to programs that benefit cities. The report, released by IHS Global Insight and the U.S. Conference of Mayors, says job growth for nearly all of the nation’s metro areas will not be fast enough this year to push the unemployment rate below 8 percent, and predicts that 22 percent of metro areas hardest hit by housing crisis will take five years to recover.

Report Indicates Significance of Tax Expenditures

A report from the U.S. Joint Committee on Taxation (Reuters) highlights the significant role tax breaks, or expenditures, play in the federal deficit, and suggests reform is likely to be a tedious process. Its estimates for exclusions for employer-provided healthcare have increased 10 percent from the last estimate in December 2010.

Debt and deficits. America’s debt is rising at an unprecedented rate and the response will require tackling some of the thorniest issues in U.S. politics –taxes and entitlement spending. Leading experts assess the challenges in reducing U.S. debt.

Infrastructure

President Obama Denies Pipeline Permit

President Obama denied a permit for the highly-contested Keystone XL pipeline project (WashPost). Environmentalists praised the decision, saying it will allow the energy company, TransCanada Corp., to devise a more environmentally-friendly route, while Republican lawmakers and the U.S. Chamber of Commerce characterized the move as “politically motivated” and anti-job creation.

Infrastructure. Upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems as well as infrastructure related to energy security is seen as essential to maintaining U.S. competitiveness. Experts at the forefront of policy discussions recommend how to pay for this.

Corporate Regulation and Taxation

Report Highlights Business Lobbying-Tax Subsidy Relationship

A new report from left-leaning advocacy groups, the U.S. Public Interest Research Group and Citizens for Tax Justice, underscores the relationship between corporate tax breaks and industry lobbying. The findings claim 280 Fortune 500 companies collectively paid a federal income tax rate of 18.5 percent, only about half of the statutory 35 percent corporate tax rate, while receiving $223 billion in tax breaks.

Congress is currently working on corporate tax reform (The Hill), with Dave Camp, the Republican chair at Ways & Means taking the lead; and President Obama is expected to unveil a corporate tax reform proposal shortly.

Corporate regulation and taxation. Regulatory burdens, offshore employment, and tax-shelter abuses have fed debate over the scope of rules for U.S.-based businesses. Top economists and business experts offer solutions for addressing corporate taxes.

The Renewing America morning brief presents daily news and analysis on the major domestic challenges facing the United States that have significant consequences for national security and foreign policy. Topics include the debt and deficit, infrastructure, education, innovation, trade, and corporate regulation and corporate regulation and taxes.

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