Economic growth is an essential element of balancing our budget, and the crux of economic growth is tax reform. This month citizens across the nation will be filing their 2012 tax returns. But faced with one of the most complicated tax structures in the world, nearly 90% of us will turn to tax professionals or preparation software for help, spending over $160 billion in the process.
Our obsolete tax code, like the buildup of plaque in arteries, is restricting our economic growth. It leaves American families struggling to navigate a maze of deductions that phase in and out, credits with complicated conditions and confusing rate structures. Our nation’s job creators are crippled under an archaic tax code that is far from competitive when weighed against the international marketplace.
Maintaining such a broken system is illogical. Our current tax structure was established nearly 50 years ago; it was established when the idea of a global marketplace was fiction. But that’s hardly the business landscape American companies face today. How fair is it to disadvantage our own job creators against global competitors with a total tax on investment of 55%? It’s not surprising these companies leave America, taking American jobs with them, for more favorable tax structures elsewhere.
Our tax code should be flatter, fairer and simpler. It should make compliance easy. It should allow companies to move American jobs and money back from overseas. Our citizens should know that as surely as they are paying taxes, General Electric is paying taxes.
House Budget Chairman Paul Ryan (R-WI) agrees and has proposed a tax structure our country has been in need of for years. In the House 2014 Budget, Chairman Ryan outlines a tax for the future of America. It becomes flat, fair and simplified by consolidating the current seven individual income tax brackets into two tax brackets of 10% and 25%, with a corporate tax rate of 25%. This is a structure capable of competing in the global market place bringing back and keeping American businesses on American soil.
To accomplish these goals, reform must be comprehensive – no special interest exceptions. Congress must broaden the tax base by reducing the loopholes, deductions and credits, while simultaneously reducing the overall tax rate. This ensures that our tax system is conducive to saving and investment by all Americans of all income levels.
Changing the tax dynamic requires the foresight to recognize what these lower tax brackets mean. The two brackets allow hard working Americans to keep more of their paychecks and allow companies the economic room to increase hiring. When corporate tax reductions lead to increased hiring, there are more American jobs filled by more American taxpayers. It’s an approach that works for all taxpayers in our nation and is long overdue.
This tax reform strategy is currently underway, guided by the House Ways and Means Committee, which is seeking the guidance of the American people. Eleven working groups have been tasked with gathering input from citizens nationwide on how to build a better tax structure for America. Each group is reviewing current law in a designated subject area, then identifying, researching and compiling input from our nation’s citizens and stakeholders. Once completed, the Joint Committee on Taxation will prepare a final report.
The process is open to the public, not secluded behind closed doors in the Capitol. The Ways and Means Committee is enlisting the American ingenuity and entrepreneurial spirit that made this country great, to reform our nation’s tax code using a pro-growth approach for our nation’s economy.
As we sit around our kitchen tables this April filling out the pages of confusing tax returns, take a moment to consider a tax code that is understandable and equitable. Consider what America would be like with a code that supports and encourages job creators, drawing companies back to American soil and putting America back on a level playing field in the global market. After 50 years of complying with a broken tax system, the time for reform is now.
