For the first time in more than 30 years, Congress has an opportunity to fundamentally reform America’s tax code. Just as important in this generational opportunity is letting the middle class keep more of their paychecks and boosting the ability of small businesses to prosper.
The swamp’s Constitution is the tax code. Of course, the possibility of fundamental tax reform means that K Street special interests — the crocodiles swimming in the D.C. swamp — are working overtime to keep their carve-outs and loopholes.
The swamp’s army of lobbyists is descending on Capitol Hill and is fighting against what’s in the best interests of America’s economy. They’re fighting against fairness, economic upward mobility, innovation, and a more generally prosperous economy that the “big six” framework rolled out this week would accomplish.
K Street lobbyists and the rent-seeking special interests they represent may be living large, but over the last several years, the American economy has struggled. In fact, our economy hasn’t seen economic growth of 3 percent or more since 2005. The lack of growth, partly due to a complex and unfair tax code and exacerbated by higher taxes and increased regulation, has led to slow wage growth, hurting small businesses and the middle class.
Not only does the Republican framework for tax reform lower the top tax rate for small businesses, providing them with relief to expand and create new jobs, it essentially lowers the current 10 percent tax rate to zero by nearly doubling the standard deduction. In addition to other proposed reforms, the middle class will see their wages rise.
Another important aspect of the Republican framework is that it emphasizes on manufacturing. For too long, our tax code has been focused on finance. With President Trump’s focus on reducing regulation and the proposals for full and immediate expensing of capital investments and setting the corporate income tax rate at 20 percent, incentives will be created to broaden the focus of the economy past finance. It makes manufacturing competitive again.
Special interests in Washington are not only fighting against the middle class to ensure that the swamp keeps its carve-outs in the tax code, lobbyists are, by extension, also actively working against tax simplification. According to the Tax Foundation, Americans spend 8.9 billion hours and $409 billion complying with the tax code.
The Republican framework would significantly reduce this burden by simplifying the tax code so an army of tax experts and lawyers cannot enable huge corporations have an effective 0 percent tax rate and so the average American does not need to hire a tax preparer simply to file their taxes, or to avoid overpaying the IRS. If 9 out of 10 Americans can file their individual tax returns on a postcard, that will be major progress in draining the swamp.
Vice President Pence nailed it on the head when I met with him and other conservative organizations last week: this is a transformation of the tax code, and it deserves our support if the bill reflects the framework, but until we have hacked and slashed until this tax code is exceedingly simple and easy to follow, we shouldn’t stop. We need to do tax reform bills every year.
We’ve seen what has happened from 30 years of adding loopholes and carve-outs chunk by chunk year after year. The tax code has ballooned and is a burden on every average taxpayer out there.
This bill is necessary, and it deserves the support of everyone who wants to remove the importance and the burden of the swamp from our shoulders. And next year, we should move the ball even further down the field.
Adam Brandon is the president of FreedomWorks.