Now’s the time for simpler, fairer taxes
A recent Gallup poll detailing congressional approval ratings suggests that one reason ratings remain low is our divided government, with Republicans controlling the House and Democrats controlling the Senate. Yet, what is not reflected in that data is another historical fact unnoticed by most – it was a divided government that, in 1986, last passed and enacted tax reform.Today, we’re again standing at a moment not so different from 1986 – with a divided government – and again we are faced with the need to fix our broken tax code.
That’s right, a broken tax code. Imagine the U.S. economy is a car driving down a highway. Our goal as a nation is to keep one foot on the gas pedal, and head straight down the road to economic recovery and growth, leading to more jobs and higher wages.
But our current tax code acts like a wheel out of alignment, slowly pulling the car further and further off-track. There are warning signs across the dashboard, alerting us to the problem, and they are starting to flash with greater frequency. There have been more than 4,500 changes to the tax code in the past decade alone – that averages more than one a day. Today’s tax code contains nearly 4 million words, and it takes the average taxpayer 13 hours to gather and compile all the receipts and forms just to file a return.
Given that degree of complexity, it is no wonder that 9-of-10 Americans either pay someone or purchase software to prepare their taxes. All of that time, money and energy adds up – with businesses and individuals spending 6.1 billion hours and $168 billion a year trying to comply with the tax code.
And while the U.S. tax code is dragging our economy down, other countries are surging ahead in the global marketplace. Most of our global competitors have updated their tax laws, but our outdated international tax system actually encourages American businesses to keep profits and jobs outside America. Because of the U.S. tax code’s complexity and our high tax rates, America is falling further and further behind on the international stage.
These are the warning signs on the dashboard – we have to fix the car now or risk being left on the side of the road. For the good of our economy, and for the sake of making the tax code simpler and fairer for families, Congress needs to come together to fix the tax code.
As part of that effort, we have started a nationwide tour focused on making the tax code simpler and fairer for individuals and job creators. This week, we’ll be in California, visiting two high-tech businesses – part of an industry that remains critical to a strong and growing economy throughout the Golden State.
While we continue to develop the policies, and incorporate suggestions from the experts like those we meet during our travels, we’ve agreed on three fundamental principles to ensure that tax reform grows and expands the economy.
The first is a boost and fairness for America’s families. People don’t mind paying their taxes as long as they know they’re not getting the short end of the stick. Simplifying the code means regular families will be on a level playing field with those who can afford high-price tax advisers.
We agree that tax reform should result in a system that is as progressive as the current one. Tax reform will close special-interest loopholes to help lower rates. We will ensure that low-income and middle-income Americans will pay no more taxes than they do today.
The second principle is to level the playing field for U.S. employers. The U.S. corporate tax rate is the highest in the world. The current system picks winners and losers and puts U.S. companies at a disadvantage in the global economy. Tax reform must make America a more attractive place to invest and hire.
The third principle is a tax code that is fair and simpler for small businesses. In California, as in Michigan and Montana, small businesses are the heart of most communities. Whether it is an innovative technology start-up, a family farm, a winery or the local family restaurant, we will work to ensure that any tax reform plan does as much to help a small family business create jobs and compete as it does for a large company.
It is pretty simple. It is long past time for a tax code that works for you – not special interest groups. Making the tax code more effective and efficient can’t, and won’t, happen when just a few people and a handful of special interests are making the decisions. Through www.taxreform.gov we’ve received more than 14,000 messages about how Congress can make it easier for American families and job creators to do their taxes and make sure that small businesses get as much help as big businesses. Visit the site to add your ideas and join the conversation