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HBX Business Blog

Is Tax Policy Hindering U.S. Competitiveness?

Posted by HBX on September 15, 2016 at 3:29 PM

United States Captiol Building with American Flag

The U.S. Competitiveness Project is a Harvard Business School initiative led by Professors Michael Porter and Jan Rivkin. This year's report was released today and included research from HBX Professor Mihir Desai on U.S. tax reform. Professor Desai teaches the new HBX certificate program Leading with Finance.

Harvard Business School (HBS) launched the U.S. Competitiveness Project in 2011 as a multi-year, fact-based effort to understand the disappointing performance of the American economy, its causes, and the steps needed by business leaders and policymakers to restore economic growth and prosperity shared across all Americans. Read the full report here.

This year's report outlines an eight-point plan for restoring U.S. competitiveness. Professor Desai's research focuses on tax reform, an area where much attention is given. According to Professor Desai's research, "tax reform is the single area with the greatest potential for immediate impact on the economy and is long overdue given changes in the global economy. Corporate tax policy has become a key obstacle to U.S. competitiveness and economic growth, and reforming both corporate and personal taxation is essential to achieving a sustainable federal budget."

The report goes on to say, "the top corporate tax problems, according to the surveyed business leaders, are the high corporate tax rate and the taxation of international income. Business leaders reported overwhelming and bipartisan support (over 95%) for corporate tax reform...The feasibility of corporate tax reform is promising given the broad consensus on the nature of the problem and the required direction for reform."

The report calls on leaders to be frank about the challenges the U.S. faces and to work harder to move the U.S. economy in the right direction. "To achieve the right kinds of tax reform, leaders must begin to speak more realistically about the fiscal realities America faces. In addition, simplistic polarizing and protectionist rhetoric must be avoided. The time for tax reform is long overdue."

Read the full press release on the U.S. Competitiveness Project here.

Professor Desai teaches Leading with Finance, an online program designed to provide business leaders with a thorough understanding of the principles of finance and a toolkit for making smart financial decisions. 

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Topics: HBX Insights, HBX Finance