America’s tax code is longer than the Bible, but with none of the good news! With more than 70,000 pages, only tax lawyers and accountants can make any sense of it.
House Republicans are committed to fixing America’s tax code through common sense reforms outlined in our Tax Reform Blueprint.
Our Blueprint is centered around 3 basic ideas:
· Simplicity and fairness
· Jobs and economic growth
· A “service-first” IRS
Thirty years ago, President Reagan signed the most recent major tax code overhaul into law. Since then, more and more loopholes, duplicative credits, and special provisions have wiggled their way back into the tax code, leaving us with the convoluted, unfair code we have today. President Reagan’s Treasury Secretary, James Baker, at that time described the tax code as a garden that needs constant weeding. Unfortunately, our tax code hasn’t had a good “weeding” from the gardener since 1986.
Recent estimates indicate that Americans spend more than $409 billion and 8.9 billion hours trying to comply with our tax code. To simplify the tax code for all Americans, our House Republican Blueprint reduces the current seven different individual income tax brackets down to three brackets. Our plan also consolidates the five most common family tax benefits down to two benefits. These simplifications, along with other common sense reforms, would allow Americans to have a simple, fair “postcard” tax form.
n addition to being overly burdensome for hardworking American families, the current tax code presents a major hurdle for small businesses, which are the main drivers of America’s economic engine. For example, one of the most common types of small businesses, S corporations, pay an average of $12,000 per year in tax compliance. Our House Republican Blueprint would reduce taxes on small businesses, currently as high as 45 percent, to a new low tax rate of 25 percent. This reduction would make it easier for small businesses to save and invest in their future, raise wages for employees, and create new jobs for hardworking Americans.
For larger businesses, America currently has one of the highest corporate tax rates in the industrialized world, at 35 percent. Only Chad and the United Arab Emirates have higher rates. Most of America’s trading partners and economic peers have corporate tax rates around 25 percent, making it difficult for American businesses to compete. Our House Republican plan would install a flat 20 percent corporate tax rate to enable American businesses to be more competitive. We need our major businesses to retain jobs in America, instead of moving overseas because of overly burdensome taxes and regulations.
Tax reform means little, however, if the agency charged with collecting taxes isn’t reformed as well. Due to past scandals and the targeting of certain groups for political purposes, the IRS has lost the trust of the American people. Our House Republican Blueprint reorganizes the IRS to prioritize the taxpayer, not the government. The restructured IRS will have three primary branches: a families and individuals unit, a business unit, and a small claims court unit. The first two will be customer service oriented, with a focus on helping families, individuals, and businesses understand the tax code. The third unit will be an independent arm that will allow routine disputes to be resolved more quickly, meaning small businesses can spend less time and money on compliance.
With a new tax code built for growth, we can once again make America the best place in the world to hire and invest. The House Republican Blueprint offers a better way to reform the tax code by lowering and simplifying taxes without increasing the deficit. In doing so, we promote growth in American jobs, wages, and the economy overall.
Congressman Robert Pittenger (NC-09) is Chairman of the Congressional Task Force on Terrorism and Unconventional Warfare, Vice Chairman of the Financial Services Task Force to Investigate Terrorism Financing, and serves on the House Financial Services Committee, with a special focus on supporting small businesses, community banks, and credit unions.