Writing One Page Business Memo

interoffice memorandum

to:Kara Cobb, CEO

Maya Angelou once said, “You may encounter many defeats, but you must not be defeated. In fact, it may be necessary to encounter the defeats, so you can know who you are, what you can rise from, how you can still come out of it.” Despite the state of the economy over the past six years and the flat first quarter’s sales, our company is poised to be successful once again. Tough times don’t last tough people do, and if these last six years have showed us anything, it’s that we can overcome any obstacle that lies in our way. People will always need plumbing parts and hardware regardless of the economic state of the country. Thanks to our longstanding relationships with companies such as Delta, American Standard, and Kohler, we will continue to provide our exceptional products and services as the revival of the U.S. economy blooms into fruition. Without a doubt, America’s economy has vastly improved since the recession, but recent policy changes made by the current administration in the White House may be the key to our growth and success. The U.S. GDP has been below the normal average by 3% over the last decade and America is going to take action in an effort to alleviate this problem. According to analysis done by the Congressional Budget Office, more than 70% of the corporate tax burden falls the workforce of America. With this burden, workers across the country have less money to spend on housing and equipment most home owner need. The tax cut will cut the Federal corporate tax rate by 15% and give business the opportunity to write off non-structure capital investments. This can increase the household income by around $4,000 and raise the GDP by 3 to 5 percent. Factoring this in with the fact that the economy has been trending upward, we’re on the right side of the recession. Gasoline prices are low again and consumers are more likely to spend now that borrowing rates are historically low. Furthermore, American consumers have been spending more than they have ever in the past six years, this accounts for around 70% of the American economy. The tac cut will aid this tremendously as well. In the manufacturing sector the countries manufacturing expanded for three months straight. As if the situation weren’t promising enough, the ISM reported that the service sector has been constantly expanding for over 70 months straight. It’s always darkest before the dawn and as it seems, the worst is behind us and we’re still here. This is a testament to the willpower and perseverance of our executives and employees as well as the quality and usefulness of the products we provide. The future of this company is looking up. We have the people, we have the product, and now we can restore the company back to greatness.

The White House Office of the Press Secretary, Tax Cuts and Tax Relief Will Put the American Economy in High-Gear, The White House, https://www.whitehouse.gov/the-press-office/2017/10/27/tax-cuts-and-tax-relief-will-put-american-economy-high-gear (last accessed 1, November, 2017).

Tax Cuts and Tax Relief Will Put the American Economy in High-Gear

“We have a once-in-a-generation opportunity to pass tax reform that is pro-growth, pro-jobs, pro-worker, pro-family, and pro-American.” – President Donald J. Trump

CURRENT TAX SYSTEM HOLDS AMERICA BACK: Without tax cuts and tax relief, the American economy will be stuck with low economic growth and depressed wage growth.

• For the last decade, annual growth in U.S. GDP has been stuck below its post-WWII average of about 3 percent.

• Without new economic policies, like the Unified Framework, the United States economy will likely continue to be stuck with low growth rates.

o The Congressional Budget Office projects that our Nation’s current economic policies will continue to keep our economy stuck at less than a 2 percent average growth rate for the next ten years.

• Wages and corporate profits used to grow at nearly the same rate, but that is no longer the case. In the last eight years, real wage growth has stagnated while real corporate profits increased by an average of 11 percent per year, according to an analysis by the Council of Economic Advisers (CEA).

o Wage growth has failed to keep pace with corporate profits as corporate tax rates in the United States have become increasingly uncompetitive.

o The economic consensus is that workers bear a sizable share of the corporate tax burden. An analysis from the Congressional Budget Office indicates more than 70 percent of the corporate tax burden falls on Americans workers.

• In the last five years, new equipment and capital investments detracted from the productivity growth of the American worker, for the first and only time since World War II.

CUTTING TAXES MEANS HIGHER GROWTH AND HIGHER WAGES: The Unified Framework for Fixing Our Broken Tax Code supported by President Donald J. Trump will cut corporate taxes and allow capital investments to be written off, jumpstarting America’s economic engine.

• Cutting the top Federal corporate tax rate from 35 percent to 20 percent and allowing businesses to write off the full cost of non-structure capital investments immediately would mean faster economic growth and higher wages, according to the CEA.

o GDP could increase by between 3 and 5 percent in the long term.

o American annual household income could increase by an average of $4,000.

• The corporate tax cuts and relief in the Unified Framework could mean a boost to the economy.

o 3 to 5 percent increase in GDP over ten years could represent an additional $700 billion to $1.2 trillion in economic output, based on CEA’s calculations and CBO’s baseline. 

o Corporate tax reform could spur investment and reverse the trend of American workers losing productivity growth from new equipment and capital investment.

o Just cutting the corporate tax rate to 20 percent is estimated to increase long-run GDP by 3.1 percent, according to the Tax Foundation.

• Developed countries that have lowered their effective corporate tax rates have experienced wage growth across skill levels.

o Wages for American workers of all skill levels would increase after corporate taxes are cut.

o Developed countries with the low corporate tax rates have seen significantly higher wage growth compared with developed countries with higher rates.

• The United Kingdom shows how not to do corporate tax reform: despite the perception that they were a tax cut, the U.K. changes after 2007 resulted in a net tax rate increase. But changes on the corporate tax side of the Unified Framework lower taxes.

AN AMERICAN MODEL FOR AMERICAN JOBS: The Unified Framework will end the “offshoring model” as companies will bring profits back and invest in American workers.

• A reduction in the corporate tax rate will keep more money and investment in the United States, while reducing the incentive for companies to shift profits abroad, according to an analysis by the CEA.

o In 2016, a Federal corporate tax rate of 20 percent could have brought up to $140 billion in corporate profits back to America, according to CEA estimates.

o Those profits could have raised the incomes of U.S. households.

• Our current uncompetitive corporate tax rate encourages U.S. firms to keep profits offshore. 

o The United States has the highest statutory corporate income tax rate among the 35 industrialized Organisation for Economic Co-operation and Development (OECD) countries. 

o The U.S. statutory corporate tax rate has been higher than the OECD average for almost 20 years.

• Last year, more than 70 percent of foreign profits earned by U.S. firms were kept offshore, up from 42 percent in 1984, according to an analysis by the CEA.

o Companies hold an estimated $2.8 trillion in earnings offshore, according to Audit Analytics.

• Cutting corporate tax rates will encourage firms to invest back in the United States, creating well-paying jobs for hardworking Americans.

o After President Bush’s 2003 tax cuts, the economy created 7.8 million jobs over five years, based on data from the Bureau of Labor Statistics.

o After President Reagan’s 1981 tax cuts, the economy created 14.8 million jobs over five years based on data from the Bureau of Labor Statistics.

o After President Kennedy’s tax cuts, the economy created 12.0 million new jobs over five years based on data from the Bureau of Labor Statistics.