It’s Time for a Fairer, Simpler Tax Code
The year was 1986. Apple unveiled its Macintosh Plus computer. An 18-year-old named Mike Tyson became boxing’s youngest ever heavyweight champion. The Oprah Winfrey Show debuted on CBS. Moviegoers got the “need for speed” watching Tom Cruise fly F-14s in Top Gun. Americans were heartbroken by the Challenger Space Shuttle explosion. Guy Hunt was elected Governor of Alabama. And New York real estate developer Donald Trump rebuilt the Central Park ice rink.
1986 was a memorable year for many reasons, but what many might not remember is that was the last time the United States revamped our federal tax code. The Tax Reform Act of 1986 was a signature achievement of the Reagan Administration, which worked hand-in-hand with Republicans and Democrats in Congress to lower crippling tax rates and close costly loopholes. In the 31 years since then, much of that monumental law has been rolled back due to piecemeal revisions favoring various special interests. Today, our tax code is a complicated mess, and it’s time for Congress to again enact reform.
Over the next several weeks, the House of Representatives is scheduled to move forward with tax reform, and we hope to get legislation to the President’s desk this year. There are four basic tenets of our tax reform plan: 1. Lower tax rates for every taxpayer so that Americans can keep and invest more of what they earn; 2. Lower corporate tax rates to be globally competitive while closing the loopholes put in place to avoid paying our current high tax rates; 3. Simplify the tax code so that most people can file their taxes on a form the size of a postcard; and 4. Clean house at the IRS to make it an agency that works for taxpayers, not against them.
Consider the benefits tax reform would have for small businesses and those they employ. I’ve said many times that small businesses are the economic engine of our country. In Alabama, small businesses employ about half of our private sector workforce. Unfortunately, our tax code makes it difficult for them to operate, let alone succeed. Many small businesses pay as much as 44 percent in taxes, which adds up to be more than almost anywhere in the world. On top of that, many businesses are forced to pay high costs just to process their taxes and comply with the related regulations, amounting to $147 billion per year nationally.
Easing the tax and regulatory burden on small businesses would allow operators to hire new employees, give raises or bonuses to existing ones, or even expand their business. Pro-growth tax reform could unleash our country’s economic potential and lead to the creation of millions of jobs, many at small and medium-sized business.
For individuals, our plan would ensure that taxpayers with similar incomes receive similar tax bills. Makes sense, right? We would also make the tax code simpler and reduce the length of tax returns from the IRS. Earlier this year, President Trump joked that the tax preparation company H&R Block might be the only business that “wouldn’t be too happy” with our tax reform plan. No disrespect to the good people who earn a living helping people file their taxes, but the fact that our tax code is so complicated that many individuals need professional assistance to do their taxes is not a good thing. More simplicity and fairness in the tax code would offer American families the stability and predictability they need to plan for the future.
One tax reform proposal I did not agree with was the so-called Border Adjustment Tax, or BAT. While well-intentioned, this tax would have ultimately cost Alabama manufacturing jobs and caused families to pay more for food and clothing. I was glad to see the White House and Congressional leaders reconsider and abandon this plan.
Ultimately, our goal is to overhaul our tax code to make it simpler, fairer, and flatter. It won’t be an easy task, but I am committed to working toward a solution that helps grow our economy and improve the quality of life for those I represent.