President Trump’s push to reform the federal tax code is the perfect opportunity for the federal government to prove to the American people and American business that it is on their side.
Republicans and Democrats have run for office talking about the importance of jobs, wage growth, innovation and the new economy. Making the American tax code competitive will go a long way to addressing these issues that are important to the American people, and members of both parties should find a way to work together to make it happen.
American businesses pay the highest corporate tax rate among industrialized nations, and the U.S. government taxes American business’ profits from overseas when they are brought back to America. These two issues inevitably lead businesses to keep their money parked offshore rather than investing back into the American economy. This has to change.
Fortune 500 companies alone are holding an estimated $2.6 trillion in profits in other countries because moving it back to America would cost them roughly $767 billion in federal taxes, according to the Institute on Taxation and Economic Policy. No businessperson with a responsibility to their shareholders would do such a thing.
Making our corporate tax rate competitive would allow American companies to invest in their operations in the United States, creating more jobs and generating higher wages for American workers — something we should all agree are bipartisan goals.
Tax reform isn’t just about business, though. I’m optimistic that the discussion of comprehensive tax reform in Washington, D.C. also has focused on tax cuts for the middle class. Under a proposal offered by the president, the first $24,000 of a couple’s income would be completely tax-free, providing direct tax relief for many low and middle income Americans.
Additionally, simplification of the tax code should alleviate the ever-growing burden of compliance. It’s estimated that under the current tax code, nearly 90 percent of taxpayers need assistance in preparing their tax returns. Half pay a professional to prepare it for them, while another 40 percent use software. Taxpayers spend an estimated $195 billion preparing their income tax returns because of the complexity of the tax code.
A proposal that would eliminate the alternative minimum tax and increase the standard deductions for individuals and families would make it more advantageous for 95 percent of Americans to claim the standard deduction and fill out a simple form for tax filing, saving millions of American families the time and headaches associated with tax season.
To accomplish this reform, some tough choices must be made. These will include the elimination of some special interest tax breaks and deductions. If, however, the federal government continues to focus on policies that support American workers and create American jobs, a bipartisan solution should be possible.
Sen. Ben Kieckhefer represents Nevada Senate District 16.