Congress, do your job and pass tax reform legislation

Congress, do your job and pass tax reform legislation
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September is turning out to be a big month for the ongoing quest to update the United States’ outdated, overly complex tax code and lower rates for businesses and individuals.

Both congressional committees with primary tax-writing responsibility are pushing forward: This week, the Senate Finance Committee held a hearing on business tax reform, and later this month, the House Ways and Means Committee is expected to release details of its long-promised tax overhaul legislation.

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This legislative action is encouraging, but lawmakers need to push harder and faster on this critical growth issue and get the job done as soon as possible for the American people.

 

While the need for pro-growth tax reform is urgent, tax reform can’t get done without a budget in place. That means the first priority for members of Congress — especially those on relevant committees — should be to pass a commonsense budget as soon as possible.

Once the budget is in place, it is imperative that Congress then swiftly draft and pass final tax reform legislation to send to President Trump for his signature. The nation’s hardworking families and small businesses cannot wait any longer. In fact, 1986 was the last time comprehensive tax reform was passed. 

Pretty much everyone agrees that the federal tax code is a problem badly in need of a solution. It’s far too complicated, riddled with corporate giveaways and sets a business rate that is the highest in the industrialized world.

While there is disagreement about how to fix our tax system, even within the two parties, we cannot let political spats or parochial interests derail this once-in-a-generation opportunity to create an environment that once again incentivizes growth in the United States.

Simplifying the tax code for individuals will give Americans two of the most precious items they have, time and money. If done correctly, making the tax code less complex will free up billions of hours and potentially mean more money in the pockets of hard-working Americans. 

The corporate tax rate must also be lowered so U.S. companies are more competitive. The code needs to be simplified to help cut administrative costs for U.S. businesses (especially small businesses), and loopholes that play favorites in the private marketplace must also be eliminated.

If Congress is able to successfully do all this, the resulting positive economic outcomes could be spectacular.

According to a recent study by Capital Policy Analytics President Ike Brannon and Marquette University professor Andrew Hanson, lowering the corporate tax rate to an equitable and globally competitive level will help raise wages, create jobs and drive economic growth.

For example, a 10-percent to 20-percent cut in the corporate rate could increase wages by as much as 12 percent and employment by as much as 10 percent. These are the kinds of numbers that can make a real difference for Main Street, USA.

Absent such decisive action on tax reform, however, the consequences will be dire — economically for the nation and politically for the Republican Party. Without meaningful tax reform, our country is likely to remain in the growth doldrums for another generation, while other nations continue to grow and become more competitive and prosperous.

If this happens — after years of promises to get tax reform done and return to robust growth — the GOP is likely to pay a very high political price in the next several elections.

When it comes to tax reform, failure is not an option. So Congress: Pass a budget, draft a broad tax reform bill and make sure enough members get to “yes” to pass it — and do it before the year ends. That’s what the nation voted for, and we all expect nothing less. 

David Williams is president of the Taxpayers Protection Alliance, an organization dedicated to educating the public through the research, analysis and dissemination of information on the government’s effects on the economy.