by William McBride
September 26, 2013
America’s economic problems are often attributed by those in the popular press and in political office to a “lack of demand,” resulting in numerous policies aimed at boosting consumption. Meanwhile, investment—the true engine of economic growth—is at a nearly record low, well below the levels seen in our largest trading partners. Cross-country comparisons show the U.S. has an extremely low level of investment and low economic growth relative to both developed and major developing countries. A primary reason is U.S. tax policy, which is heavily slanted against investment. Tax reform can address these problems by cutting the corporate tax rate, currently the highest in the developed world, reducing individual income tax rates on non-corporate business, reducing investor-level taxes, improving business expensing, and moving to a territorial tax system.