The opportunity to achieve comprehensive, pro-growth tax reform comes just once in a generation. House Republicans believe we now have a historic opportunity to reform our broken tax code and improve the lives of all Americans.
In June, we unveiled our tax reform Blueprint – a bold vision for a 21st century tax code that will strengthen our economy for the long term. We are committed to delivering reforms smart enough and innovative enough to spur lasting increases in U.S. economic growth.
Our tax reform Blueprint incorporates a number of groundbreaking pro-growth policy ideas – historic firsts designed to unleash historic American growth. These include:
Historic First: Ending the Washington-imposed Tax Penalty on “Made in America” Products
Today, when American-made goods and services are exported, they are often taxed twice. First, Washington imposes taxes on the income from the foreign sales of U.S. products. Then, foreign countries tax those U.S. products again when they arrive overseas. The way Washington taxes U.S. exports puts our products at a major price disadvantage versus those made in other countries.
To help American businesses compete and win, we must go bold and level the playing field. That’s why, for the first time in our nation’s history, our Blueprint ends the Washington-imposed tax penalty on “Made in America” products and services.
As Ways and Means Chairman Kevin Brady (R-TX) explains in the Wall Street Journal:
“Because ‘Made in America’ products and services currently face a price disadvantage both at home and abroad, American exports will no longer be taxed, and imports will not be subsidized. Competition will occur on price, quality and service—rather than tax regimes.”
By incorporating this innovative change, our Blueprint takes historic steps to promote stronger competition and lower the prices of American-made products worldwide. It also removes incentives for U.S. companies to relocate overseas. In the end, this bold new feature will increase the demand for “Made in America” products, lead to more jobs and growth here at home, and promote strong American leadership in the global marketplace.
Historic First: Cutting Taxes on Main Street Income
Today, many of America’s small businesses are operated as sole proprietorships or “pass-through” entities such as partnerships or S-corporations. These businesses create more than half of all U.S. jobs but, under the current U.S. tax code, their hard-earned income is subject to the individual tax rate on wages – which today can be as high as 44.6%, making it difficult for these Main Street job creators to succeed, grow, and support our local economies.
Under our Blueprint, all of this would change. For the first time in American history, the small business income of Bill the Electrician will no longer be subject to the same tax rates as the wage income of Bill Gates.
Our Blueprint creates a separate, low tax rate for Main Street job creators so that small business income will be taxed at no more than 25% – the lowest rate on small business income since before World War II. This will promote robust American job growth from the bottom up, allowing small businesses to keep more of what they earn so those funds can be used to grow their companies, hire new workers, and invest in their communities.
Historic First: Killing the “Death Tax”
Today, when the owner of a family business passes away, an estate tax can be levied on the person’s business and other assets when they are passed on to the next generation. This tax, commonly referred to as the “death tax,” can be as high as 40 percent. And the assets taxed at death are often being taxed for the second or third time – another Washington-imposed penalty on years of hard work, savings, and dedication.
“The death tax has destroyed over a trillion dollars in capital by forcing small businesses and family farms to shut down.”
So, in our tax reform Blueprint, we completely repeal the death tax.
For the first time since the death tax was created in 1916, the owners of family businesses will have the peace of mind of knowing that, if something were to happen to them, the IRS cannot swoop in and take nearly half of what they and their families worked for generations to build.
And, by killing the death tax, our Blueprint will help bring renewed strength to America’s economy by making it easier for family-owned businesses to succeed and support critically needed jobs in our local communities.
House Republicans recognize that our current tax code is broken beyond repair. To promote historic American growth, we cannot think small. We must move forward with bold, pro-growth ideas that will unleash our nation’s economic potential. That’s exactly the approach we are pursuing with our built-for-growth tax reform Blueprint.
CLICK HERE to learn more about our #BetterWay tax reform Blueprint.