Last week, the House took a big step toward long overdue tax reform when we passed our budget for Fiscal Year 2018. The budget is important because it opens up the process by which we can bypass a Democrat filibuster and pass tax reform with 51 votes in the Senate.
If you read last week’s column, you know that the unified Republican tax plan will benefit working families by lowering tax rates, increasing the standard deduction, expanding the child tax credit, and simplifying the entire tax code. Under our plan, most Americans would be able to do their taxes on a single, small postcard.
For me, the top priority of tax reform is to make things easier for working families who deserve to keep more of their hard-earned money in their pockets instead of sending it to the federal government. That will remain my main goal throughout the process.
At the same time, tax reform also allows us to level the playing field for small businesses and promote economic growth. When the American economy is stronger, American families are stronger. Many things have changed since we last had tax reform in 1986. Unfortunately, for the most part, the way we tax businesses has not.
With this in mind, our tax reform plan strives to help small businesses, which are the backbone of the American economy. Most small business owners and job creators say that the current confusing and burdensome tax code is one of the biggest challenges they face.
Under our plan, the top tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships, and S corporations would be 25%. This is significantly lower than the top rate these businesses pay today. Most Americans work for these Main Street businesses, and lowering the small business rate will produce a boom of economic activity and more American jobs.
Our plan also calls for a reduction in the corporate tax rate to 20%. Our current corporate tax rate is the highest in the industrialized world and has resulted in businesses shipping jobs and revenues overseas. This is why lowering the corporate rate is a key part of President Trump’s economic agenda.
As another way to help spur economic growth, our plan would allow businesses to deduct 100% of the money they spend on capital investments for at least the next five years. This will incentivize businesses to buy heavy machinery and equipment that is necessary to really jumpstart our economy.
Importantly, our plan also focuses on leveling the playing field and closing loopholes that only benefit the well-off and well-connected.
Another key piece of our plan centers around bringing jobs and businesses back to America. We want to move from the current “offshoring model” that has been a disaster for American workers toward an “American model” that encourages more companies to do business in our country.
We do this by ending the current tax code’s disincentive for companies that want to bring wealth they have earned overseas back to the United States. Foreign profits already accumulated offshore will be subject to a low, one-time tax. This will bring money flowing back into America.
By creating a more business-friendly tax code, more jobs will be created and greater opportunities will exist for the American people. Again, a stronger economy leads to a stronger America where everyone benefits.
Of course, our tax reform plan must still go through the legislative process and changes will likely occur. I also want your feedback to hear what concerns or ideas you have regarding our tax reform plan. You can find the plan online at FairAndSimple.gop.