by ConservativeHQ.com Staff
Nothing embodies the Washington DC swamp better than the U.S. tax code: The Congressman and Senators who write it, the lobbyists who work to manipulate its arcane rules to benefit the inside few and the Internal Revenue Service that enforces it – or not – form one of Washington’s most fearsome iron triangles.
And yesterday, President Donald Trump took them all on.
The one-page outline for changes to the tax code the White House issued pinpointed numerous changes proposed by the President that would affect almost every American, and American business.
The last major effort to successfully reform the U.S. tax code was over 30 years ago under President Reagan.
The Reagan tax cuts and tax reform kicked-off two decades of economic growth, however, since then the supply-side economics underpinning the Reagan tax plan have been substantially eroded.
Today, according to the IRS’ National Taxpayer Advocate, the federal tax code is nearly four million words long.
Congress has made more than 5,900 changes to the federal tax code since 2001 alone, averaging more than one change a day.
What’s more, with a corporate tax rate of 35%, US businesses face the highest statutory tax rate in the developed world, and fourth highest effective tax rate, which discourages job creation or investment.
The US is out of step with its competitors, having the highest corporate income tax rate among the 35 Organization for Economic Co-operation and Development countries (OECD) and is the only nation that has increased its business rate since 1988.
The high corporate tax rate keeps trillions of business assets overseas rather than returning them to America to be reinvested here.
A lower business tax rate will also discourage corporate inversions and companies from moving jobs overseas.
While the blue print was short on detail here is what we know about the President’s plan for the business and economic growth side:
President Trump proposes a 15% business tax rate.
President Trump proposes a territorial tax system to level the playing field for American companies.
President Trump proposes a one-time tax on trillions of dollars held overseas.
President Trump proposes to eliminate tax breaks for special interests.
Democrats were quick to condemn the President’s pro-growth plan.
“This is an unprincipled tax plan that will result in cuts for the [wealthiest Americans], conflicts for the president, crippling debt for America and crumbs for the working people,” said Sen. Ron Wyden (D-OR), the top Democrat on the Senate Finance Committee.
However, a look at the reality of the plan shows that, even setting aside the job creation benefits of corporate tax reduction and reform, individual taxpayers would be in many ways the greatest beneficiaries of the President’s plan:
President Trump proposes to reduce the 7 tax brackets to 3 tax brackets of 10%, 25% and 35%.
President Trump proposes to double the standard deduction.
President Trump proposes to provide tax relief for families with child and dependent care expenses.
President Trump proposes to eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers.
President Trump proposes to protect the home ownership and charitable gift tax deductions.
President Trump proposes to repeal the Alternative Minimum Tax.
President Trump proposes to repeal the death tax.
President Trump proposes to repeal the 3.8% Obamacare tax that hits small businesses and investment income.
Pro-growth conservatives were quick to embrace President Trump’s tax reduction and reform outline.
The Trump Administration’s tax reform proposal is massively pro-growth,” said Club for Growth president David McIntosh. “Cutting rates and eliminating deductions will put the U.S. squarely on the path of sustained economic growth, and allowing small and mid-size businesses to use a new 15% business tax rate is crucial to that growth. This is the tax plan that the American people supported when they elected President Trump, so House Republicans would do well to give it their full support.”
Americans for Prosperity President Tim Phillips said, “This bold plan put forward by the Trump administration is a giant leap forward for tax reform, and sends the right signals to accelerate economic growth and investment. We’re glad to see the White House follow through on its commitment to making tax reform a top priority. Reducing the tax burden on businesses will encourage long-term investment, make them more competitive and help get our economy back on track. It’s also encouraging to see progress on pro-growth tax reform that excludes the Border Adjustment Tax, which would be a needless and painful tax on consumers. Congress should follow the administration’s lead and deliver on promises for a tax overhaul that will improve the lives of millions of hard-working Americans.”
FreedomWorks President Adam Brandon said, “The tax reform plan sketched out by Secretary Mnuchin rekindles the spirit of supply-side economics. It is a big step in the right direction and would spur economic growth. It provides a tax cut to Americans, accomplishes the needed goal of tax simplification, and lowers the United States’ excessive corporate tax rate. We support President Trump’s goal of pro-growth tax reform, and look forward to working with the administration and congressional leadership to pass a tax reform bill for the first time in more than 30 years.”
The administration is now planning to hold listening sessions to get feedback on their plan as they work with lawmakers to flesh it out. The House Ways and Means Committee is expected to hold tax reform hearings as the panel continues to develop legislation based on the House GOP blueprint. We will keep readers informed and urge conservatives to contact their Representatives and Senators (the Capitol switchboard is 1-866-220-0044) to urge them to support the President’s plan.
Reprinted with permission from ConservativeHQ.com