The Promise of Tax Reform

COMMENTARY Taxes

The Promise of Tax Reform

Sep 26th, 2017 2 min read
COMMENTARY BY
Tommy Binion

Director, Congressional and Executive Branch Relations

Thomas is responsible for Heritage's many programs on Capitol Hill and its engagement with the administration.
Right now, the tax code is doing way more harm than good. iStock

Key Takeaways

Every year as they try to make ends meet, families and small businesses are up against a 74,000-page tax code.

This tax-reform effort promises to be a tax cut to the tune of $1.5 trillion.

Rather than investing in their family's future, Americans are struggling to find good jobs with good pay.

America stands in desperate need of tax reform.

Every year as they try to make ends meet, families and small businesses are up against a 74,000-page tax code. The code is the product of decades of special-interest carve-outs and schemes that are impossible to comply with.

It's time to start fresh. Americans needs Congress to step up and relieve them of this unnecessary burden.

Congress and the president are closer to tax reform now than at any time in recent history. And this year, they're likely to succeed. That's great news for anyone who pays taxes, and anyone who is part of the American economy.

The president is dedicated to passing comprehensive tax reform by the end of the year. Furthermore, leaders in Congress are determined to push past any differences they have and deliver on years of promises. The reasons for this are simple – and have very little to do with the usual politics.

Republicans are poised to enact sweeping tax reform not to help out one group or another but because tax reform will be a boon for every single American. Tax reform is about the people that pay taxes and the people that participate in the economy. That's you, that's your neighbors, that's your favorite restaurant, and that's the company that makes that electronic device you've got your eye on.

First, the latest tax-reform efforts will benefit individuals in a direct way: They'll pay less in federal income tax, and it'll be easier to pay taxes. Tax reform will lower and simplify tax rates for everyone who pays income taxes on the wages they earn at their jobs. Congress is even considering doubling the size of the standard deduction, so that Americans are paying taxes on less of the money they earn.

Next, tax reform will cut rates for corporations, and if you're one of the $54.8 million Americans who works at a corporation, that directly benefits you as well. Recent studies show that labor bears almost the entire cost (between 75 percent and 100 percent) of the corporate tax.

In other words, for every dollar the government taxes corporations, the wages that corporation pays out go down a dollar. Slashing corporate rates will bring up wages, and hardworking Americans will be taking home more money.

That isn't the only reason cutting corporate rates is important, though. If their rates are cut, corporations will invest their extra profit in their business. That means more hiring and more jobs. This is the key to the explosive economic growth that is the promise of tax reform. If tax reform happens, companies will be paying more employees better, rather than paying the tax man.

Lastly, this tax-reform effort promises to be a tax cut to the tune of $1.5 trillion. That's a big number, perhaps too big to comprehend. We, as a nation, are better off if that huge amount of money stays in real America in the hands of families who need it and business who will invest it. The alternative is that it comes to Washington and is spent to expand an out-of-control bureaucracy.

Right now, the tax code is doing way more harm than good. Rather than investing in their family's future, Americans are struggling to find good jobs with good pay. Each of the 74,000 pages we all must comply with every year is a destructive force in the economy. It's time for the government to get out of the way and let Americans keep more of the money they earn.

If they're allowed to do that, the economy will go back to growing, and America can be more prosperous than ever.

This piece originally appeared in The Sacramento Bee