July 25, 2006
Holtz-Eakin on Threats to U.S. Prosperity and Corporate Tax Reform
For immediate release
Media Contact: William Ahern (202) 464-5101
Washington, D.C.—A rising tide of protectionism worldwide threatens international prosperity, according to Douglas Holtz-Eakin, Director of the Greenberg Center at the Council on Foreign Relations and former Director of the Congressional Budget Office (download the full interview at http://www.taxfoundation.org/podcast/show/1724.html).
Holtz-Eakin made his comments on a wide range of economic issues in a conversation with Tax Foundation President Scott Hodge, in the foundation’s new podcast series.
Holtz-Eakin singled out Lou Dobbs as typical of the new protectionist sentiment in the U.S. but observed that it is a worldwide phenomenon.
“One can think of the past 75 years as the long, slow process of unwinding catastrophically bad tariffs from the Great Depression,” said Holtz-Eakin. “One would hope we don’t do a U-turn on the success we’ve had.”
Turning to international taxation, Holtz-Eakin commented on the U.S.’s unusual system of taxing worldwide income as opposed to the territorial systems enforced by most nations.
“A nation can either tax its citizens on their income regardless of where in the world they might earn it or it can tax the people who are in the United States for the income they earn in the United States regardless of whether they’re citizens or not. We have chosen the first of those while most of the world has chosen the second. … A territorial system has some advantages from the viewpoint, particularly, of business taxation.”
Closer to home, on subjects closer to his former concerns as Director of the Congressional Budget Office, Holtz-Eakin gave his assessment of recent trends in federal spending and the prospects for tax reform.
“It’s a tremendous irony that I spent two decades of my career as a tax economist and have found that that matters so little compared to what we spend on Social Security, Medicare, and Medicaid. … We simply cannot repeat the cost growth of the past four decades and layer on the baby boom retirement,” said Holtz-Eakin. “The Medicare actuaries have this optimistic scenario in which those programs triple in size. Even that would force us to raise taxes. Whether you’re a Republican, a Democrat or a Martian, that’s the central threat to tax reform.”
The interview is Number 2 in the Tax Foundation’s podcast series. It’s available online at http://www.taxfoundation.org/podcast/show/1724.html.
The Foundation will publish a podcast each Tuesday, featuring an interview that sheds light on the nation’s tax system. Former Chairman of the Ways and Means Committee Bill Archer will be the guest in the next podcast, Tuesday, August 1.
Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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