Capital Formation Newsletter
July-August 2004, Vol. 29, N0. 4

1. Rep. Charles B. Rangel (D-NY) Calls for Bipartisan Cooperation, Offers Solutions

2. Falling Corporate Tax Ratesin the European Union

3. From the Archives: Senator John F. Kerry Addresses ACCF Forum

4. Mark Bloomfield, ACCF President, Talks on BBC’s “News Hour”

5. Margo Thorning Speaks at American Legislation Exchange Council in Seattle

6. Charls E. Walker Named to Committee on the Present Danger

7. From the Salon: 126th ACCF Policy Evening

Top Democratic Tax-Writer Surveys Problems and Solutions

The Honorable Charles B. Rangel, the ranking Democratic member of the House Ways and Means Committee, called for a return to bipartisan cooperation in Congress and a greater respect for differences in opinions. The African Growth and Opportunity Act (HR 4103), which passed the House by unanimous vote and was signed into law by President Bush on July 13, is a good example of the effectiveness of bipartisan cooperation, he told ACCF supporters at the July 15 Capital Formation Forum. “This country has always been respected as a beacon of hope and freedom, but we have now lost so many friends around the world,” he said, adding that he has doubts about U.S. involvement in the Iraqi war and where the conflict is headed. “If I had been in the meetings with the decision makers and had been convinced there was a threat to Israel and certain

The Congressman from Harlem, now completing his seventeenth term, also had some suggestions for the Ways and Means Committee.

“If I were Chairman of the Committee, I would work hard to bring dignity back to the process and to the debate. Relations between Democrats and Republicans on the Committee were much better in the past,” he said. “Republicans caused the bitterness, but Democrats also have their problems with the approach some of their younger colleagues are taking against the GOP. “

Any new Administration will have to deal both with the Federal deficit and the need to simplify the tax code.

Simplifying the tax code and making it equitable will have an impact on business, working people, and charitable organizations, among others, Congressman Rangel explained. In years past, the Ways and Means Committee held seminars at which experts were invited to discuss the impact of tax changes with Committee members. These seminars helped build respect among Committee members for different points of view. Returning to this approach would be good for Congress and for the country, he said.

Turning to the export tax repeal legislation currently awaiting a House-Senate conference to resolve the differences between the two bills, Congressman Rangel told ACCF supporters that while large manufacturers may not be hurt yet by the trade sanctions imposed by the EU, small manufacturing firms are suffering. At the same time, he sees difficulties with the House-passed bill, including the $34 billion the House version of the bill would add to the Federal budget and some of the measure’s extraneous amendments such as the tobacco buyout.

“Democrats believe trade is important and want to see a bill enacted that promotes U.S. exports to other countries. The legislation should also contain environmental standards. Manufacturers and exporters should be able to invest in the U.S. and its workers without facing a disadvantage relative to their competitors in other nations. Our aim should be strong, well educated, and productive workers.”

Falling Tax Rates in the European Union

The striking trend of falling corporate tax rates throughout the European Union is shown in the table below. Lower tax rates imply lower capital costs for businesses. European countries hope that lowering the cost of doing business will encourage investment and

economic growth at home. Tax rates are being cut all over Europe. Germany has reduced its corporate tax rate from 57 percent in 1995 to 38 percent in 2004. Recent entries to the EU are following a similar trend. Poland has cut its 1995 corporate rate from 40 percent to its present level of 19 percent. Meanwhile, the United States has not changed its top corporate income tax rate at all during this period. It remains at 35 percent, which is above the average for both the original 15 EU countries and its newest members. Lowering EU corporate tax rates in Europe will increase the EU’s competitiveness in the global market.

From the ACCF Archives

Almost 15 years ago to the day, John F. Kerry joined fellow guests at an ACCF Economic Policy Evening to reflect upon and suggest policies to address the economic challenges facing the country at the time from the perspective of a first term U.S. Senator. Today, as the Democratic candidate for the presidency. Senator Kerry addresses the country’s economic policy challenges and offers his policy prescriptions daily to a national audience. Senator Joseph Lieberman described the ACCF Economic Policy Evenings, which take place each month Congress is in session, as “Washington’s last salon.” The sessions offer a unique opportunity for a small group of members of Congress, Administration policymakers, diplomats, influential journalists, and prominent businessmen to engage in an of-the-record

ACCF President speaks on BBC’s “News Hour”

ACCF president Mark Bloomfield joined Larry Elliott, the Guardian’s economics editor, as a guest on the BBC World Service’s “News Hour” on August 1. In a recent article for the London-based Guardian, Mr. Elliott asserted: “One look at the state of the world’s biggest economy suggests that this may be a good election for the Democrats to lose.” Bloomfield and Elliott engaged in a spirited discussion on the state of the U.S. economy, its short- and long-term challenges and the appropriate economic policies to address these challenges. Mr. Bloomfield, a periodic commentator on American politics and economics for BBC World Service, is described by the BBC as “a clear, knowledgeable analyst of the economic scenery and global situation. He is head of an economic think tank by day and a mega-runner in between.”

Mark Bloomfield at the BBC

Mr. Bloomfield and Dr. Margo Thorning, ACCF Chief Economist, appear regularly on public affairs programs and are interviewed by the U.S. and international print and electronic media on a wide range of public policies affecting the U.S. and world economies.

Margo Thorning, Senior VP, speaks at ALEC

Dr. Margo Thorning, ACCF Senior Vice President and Chief Economist, addressed the American Legislative Exchange Council(ALEC) annual meeting in Seattle on July 29th. The panel, “The Costs of a Greenhouse Gas Economy” was chaired by Georgia State Senator, Joseph Brush. Dr. Thorning discussed a new ACCF economic analysis prepared for ALEC, “Unintended Consequences: Northeastern State Proposals to Limit Greenhouse Gas Emissions”. She also gave an update on European Union efforts to meet their emission reduction targets under the Kyoto Protocol and offered an alternative approach to the “targets and timetables” approach to climate change policy advocated by proponents in the EU (see www.accf.org for northeastern state analysis and Dr. Thorning’s presentation at the ALEC meeting).

Dr. Thorning speaking at ALEC in Seattle

Charls Walker Named to Committee on the Present Danger

Dr. Charls E. Walker, founder and chairman of the American Council for Capital Formation, has been named to the Committee on the Present Danger (CPD). The Committee on the Present Danger is dedicated to winning the global war on terrorism. A bipartisan organization from the policy, political, academic, business and professional communities, CPD’s members are committed to resisting and defeating terrorist organizations, ending collusion between rogue regimes and terrorists, and supporting reform in regions that threaten to export terror. Senators Jon Kyl (R-AZ) and Joe Lieberman (D-CT) serve as CPD’s honorary co-chairmen; the Honorable R. James Woolsey, former director of Central Intelligence (1993-1995), ambassador to the Negotiation on Conventional Armed Forces in Europe (1989-1991) and Under Secretary of the Navy (1977-1979), is the co-chairman.

Dr. Charls Walker, ACCF Founder and Chairman

The ACCF chairman was co-founder, treasurer, and later chairman of the executive committee of an earlier CPD, established in 1976. Dedicated to strengthening U. S. military strength to help end the Cold War, the CPD was credited by experts as having provided a valuable national service.

126th ACCF Economic Policy Evening Draws Top policy-makers, Media

ACCF hosted its 126th Economic Policy Evening on July 20. Guests at the session included leading policy-makers from Congress and the Bush Administration, top journalists from the print and electronic media, business

leaders and diplomats. For more than 20 years, ACCF Economic Policy Evenings have attracted policy-makers from Congress and the Executive Branch, Washington-based diplomats from key nations around the globe, journalists and private sector leaders. For more information on these sessions, please visit us online at www.accf.org.

Dr. Kristin J. Forbes, member, President Bush’s Council of Economic Advisers and Martin Walker, editor of United Press International.		Dr. Margo Thorning, ACCF senior vice president and chief economist, and Thomas E. Reilly, Jr., president and CEO, American Chemistry Council.
Heidi Biggs Brock, vice president, Federal and International Affairs, Weyerhaeuser Company, and Rep. Jim McCrery (R-LA).		Rep. Tom Allen (D-ME) and ACCF president Mark Bloomfield.
Hon. Paul S. Atkins, commissioner, U.S. Securities and Exchange Commission, Thomas E. Reilly, Jr., president and CEO, American Chemistry Council, and Kevin Warsh, special assistant to the President for Economic Policy, National Economic Council.		Bingxi Zhen, minister-counselor, Embassy of the People’s Republic of China, Hugo Restall, editorial page editor, The Wall Street Journal, and Dr. Harlan L. Watson, special representative to the United Nations Commission on Sustainable Development, U.S. Department of State.