I appreciate the opportunity to be here with all of you today. There are a few events that come up every year that allow us to reflect on the progress that has been made as we continue our work on comprehensive tax reform.
This is one of those events.
Last year, I was ribbed quite a bit for quoting the lyrics of an old Dusty Springfield song. I said that when it came to tax reform we weren’t just sitting around, “wishing and hoping and thinking and praying” that tax reform would get done.
Looking back, I am pleased to see that we’ve been doing anything but wishing and hoping, so I’ll happily take the ribbing. In fact, since the last time we met there have been some critical developments on the tax reform front.
As part of our ongoing work on overall comprehensive tax reform that significantly lowers rates while making the tax code simpler and fairer, we have unveiled two more discussion drafts – bringing our total to three when you include the international tax reform draft.
- In January, we unveiled a financial products draft proposal that seeks to modernize tax rules resulting in greater simplicity and has been identified as necessary to provide more uniform tax treatment of financial products.
- In February, signifying the importance tax reform holds for the House, Speaker Boehner announced that he is holding H.R. 1 for a comprehensive tax reform bill.
The coveted legislative reservation underscores the important role that tax reform has for the House agenda.
- In March, we released a small business and pass through draft that is specifically focused on spurring greater job creation and higher wages for American workers by reducing the burden the current tax code imposes on small businesses.
- From January through April, we hosted hearings focusing on some of the most well known provisions in the code – the tax treatment of charitable contributions, tax provisions affecting state and local governments and the tax treatment of residential real estate.
- From February through April, we convened 11 separate working groups to ensure that every Member of the Ways and Means Committee – Democrat and Republican – has a voice in tax reform.
Those working groups also solicited public input from across the country, resulting in more than 1,300 submissions on nearly every topic.
More importantly, it has sparked a real bipartisan dialogue. Members are actively engaging in ways to make the code simpler, more efficient and more effective. For example, Diane Black and Danny Davis from the Education Working Group are actively seeking ways to streamline the 15 tax different tax breaks for higher education. So, we are starting to see the fruits of our labor.
- In April, I testified before the House Small Business Committee about the importance of tax reform that addresses the needs of job creators who file taxes as individuals, some of whom face a top rate of more than 44 percent – nearly 10 percentage points higher than the top rate of their corporate competitors.
- In May, my Senate counterpart, Finance Committee Chairman Max Baucus and I launched the 21st century version of the “Write Rosty Campaign” with taxreform.gov and @simplertaxes. Yes, we have a Twitter handle and you too can send us tax reform ideas in 140 characters or less. To date, we have collected more than 9,000 submissions from individuals sharing their ideas and stories about tax reform.
- In addition to these activities, I spent February through May meeting individually with House Republican Freshman – to make sure that they all know that we want them engaged and active on the tax reform front.
- And just last week, coming back for the June work period, I began one-on-one meetings with the Members of the House Ways and Means Committee so that they can share thoughts, ideas and feedback about the work that remains to be done as we move toward the goal I laid out last November – to pass comprehensive tax reform out of the Committee in 2013.
Although we have covered a lot of territory so far, we are certainly mindful of how much further we still have to go. Gucci Gulch, a well-known book that chronicles the tax reform effort that culminated in what many of us know as the “Tax Reform Act of 1986” or the “’86 Act,” was 11 chapters and 291 pages.
Now, I’ve been around long enough to know that I do myself no favors by trying to compare where we are today to a specific chapter in that book. But, I can say in all candor, we have many chapters to go – and for good reason.
Adam Smith, a Scottish philosopher and economist who is often credited as the father of political economic theory summed up the challenge we are facing when he said, “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice….”
But little of our tax code seems to resemble the words of Adam Smith.
For our worldwide American companies, the tax code is a barrier to success created by outdated tax policy that leaves our country falling further behind our international competitors.
For families, just to take one example, the tax code is about trying to manage 15 different tax provisions aimed at helping afford higher education and the more than 90 pages of IRS instructions that accompany them.
For small businesses, the tax code is a mind-numbing maze of tax rules that force nine-out-of-ten small business to rely on an accountant, or face something even worse – an audit.
Still, for others, the tax code has been used to abuse American taxpayers based on their personal beliefs.
In every case we have the opposite of “easy taxes.”
Today’s tax code is too complex, too costly and too time consuming. It is a wet blanket on the economy, smothering the job creation and wage increases Americans need.
It takes the average taxpayer about 13 hours to figure out all the forms and gather all the receipts Washington requires to file your taxes. That’s a total of 6 billion hours and over $160 billion just to comply with the IRS.
At the same time, Americans are paying more for gas, more for groceries and more for health care. Families are seeing their real wages drop, and our kids coming out of college can’t find a job.
At the risk of becoming known at this event for finding off-beat, or rarely referenced lyrics, I’ll remind everyone that Andy Williams once sang about what it meant, “to dream the impossible dream.”
Sadly, for too many, that is how the American Dream seems today. It is a fading memory for past generations and simply too far out of reach for future generations to believe they can achieve.
We cannot allow that to be true.
I agree with Adam Smith that “easy taxes” are a key ingredient to a prosperous and growing economy. That is why I am committed to comprehensive tax reform that makes our economy stronger and creates the economic opportunities that have eluded too many for too long.
But like anything worth having, tax reform isn’t going to come without hard work – and it is work that we must all do together.
I refuse to believe that America’s best days are behind us – they are not. For our children, and our children’s children, there is so much more that can be achieved.
Fixing our broken tax code means it will be more conducive to innovation, investment and sustained job creation. We will see paychecks start to rise again and we will safeguard the American Dream for generations to come.
And perhaps tax reform will yield something that, these days, we are more mindful of than ever. By making the tax code simpler and fairer, we can begin to regain the trust of the American people and restore the belief that Washington can work for them.
That’s the kind of tax code you deserve, and I urge all of you to join Congress in making that tax code a reality for all Americans.