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SGR Down. Corporate Tax Reform Next?

Posted on March 26, 2015
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"John Boehner" by Gage Skidmore - Flickr: John Boehner. Licensed under CC BY-SA 2.0 via Wikimedia Commons.



(This originally appeared in the Wall Street Journal's Think Tank)

If Congress can solve a problem like Medicare’s “doc fix,” lawmakers should be able to address a corporate tax rate that kills economic growth and moves jobs overseas.

Medicare’s “Sustainable Growth Rate” mechanism was part of the Balanced Budget Act of 1997. The idea was to tie the set rate at which Medicare doctors are compensated to economic growth. But health-care costs grew faster than the economy, and to avoid a physician exodus that could threaten the program, every year Congress would pass a temporary “doc fix” adding to the amount paid to the doctors.

Fixing the SGR gives peace of mind to doctors that they can continue to participate in Medicare. It’s good policy and good politics.

It’s such good politics that the legislation passed Thursday had bipartisan support in the House, a place not known for anything bipartisan.

Solving this problem took political will and leadership from both sides of the aisle

Our corporate tax problem is equally difficult, but with political will it could happen–this year.

The U.S. corporate tax rate is the highest in the world. Corporations in this country constantly look for ways to avoid these taxes, whether through inversions, moving overseas, or hiring lobbyists to find loopholes that they can exploit.

But there’s an easy solution: Set the corporate tax rate at 25% and get rid of the loopholes. Keep U.S. companies in the U.S. and increase wages for the average American worker.

Medicare’s doc fix seemed like an intractable problem that would never get solved. But the House proved it could do it. If lawmakers can repair the SGR, they can reform our tax code too.