While pranks are common on such a day, it was no joke when on April 1st the United States' 35 percent corporate tax rate became the highest in the world. Our current system is a relic of the Post-War era, when the U.S. reigned as the unchallenged industrial leader, and government efficiently regulated the market. Now the marketplace is global and capital has become increasingly mobile. It is time our tax code modernizes as well.
Our foreign competitors have learned this lesson as they have steadily reduced their corporate tax rates. Today, the average corporate tax rate in the Eurozone is 25 percent. In many countries, the rate is in the teens. If the U.S. is going to remain competitive with the rest of the world, it is imperative we reform our corporate tax code with a focus on lower rates and less complexity.
There is a strong correlation between economic growth and corporate tax rates. A recent study by the Heritage Foundation showed dropping the corporate rate to the global average of 25 percent would create annually an average of 581,000 jobs in the U.S. According to the same study, a typical Nebraska family of four would have an after-tax income increase by an average $2,484 per year. Now that's real reform!
These realities are a source of the growing bipartisan consensus for a comprehensive overhaul of the U.S. tax code. Tax reforms based on lowering rates and reducing tax preferences date back to the Reagan Administration, when Democrats shepherded the landmark 1986 tax reform law through Congress.
It makes sense these ideas have gained support from both sides of the aisle. By lowering rates for all Americans while closing loopholes, we can eliminate unfairness in the tax code and ensure a level playing field for all. The recently-passed House budget, for which I voted, accounts for these need changes and provides a framework for moving forward on comprehensive reform.
While I appreciate the President's recently proposed plan to lower the corporate rate, I was disappointed he included additional loopholes for preferred industries and new taxes on others. In other words, he replaced tax preferences he does not like with ones he does. Raising taxes while adding complexity to the code is fundamentally at odds with the bipartisan consensus emerging on tax reform. Moreover, some of the President's ideas would target Nebraska businesses, raising taxes and providing further confusion and complexity at a time we can least afford it.
Nevertheless, the wide recognition our corporate tax system -- and the entire code in general -- needs a major overhaul is an encouraging sign and can serve as a starting point for further discussion on how we can achieve fundamental, pro-growth reform.
Comprehensive tax reform is a top priority for me on the House Ways and Means Committee, which has jurisdiction over tax policy. Already this year, the Committee has held a number of hearings, and as we move closer to drafting our proposal, I encourage your continued input.
Reforming the tax code is really about aligning our system to the realities of the world today. I am fully committed to improving our entire tax system so we can meet the challenges and opportunities of the 21st Century global economy and continue to lead the world in ingenuity, innovation, and entrepreneurship.