On February 26, 2014, Ways and Means Committee Chairman Dave Camp released draft tax reform legislation that would significantly overhaul our tax code. For the first time in nearly three decades, we have draft legislation that would make our tax code simpler, flatter, and fairer. Since the last substantial reforms in 1986, our tax code has become larded up with narrowly-tailored provisions that make it increasingly complicated for American families and businesses to prepare their taxes. Not only would compliance be easier, but the Joint Committee on Taxation score makes clear this bill would spur hiring, increase personal incomes, and promote economic growth. I applaud Chairman Camp for his leadership throughout this process, and look forward to continuing to work to refine this draft as a member of the Ways and Means Committee.
You can learn more about the plan, including reading the full text, an executive summary, and supporting documents from the Congressional Joint Committee on Taxation at http://tax.house.gov.
Where I stand on tax reform
- We must simplify the current tax code to make it simpler, flatter and fairer: In the three decades since Congress last embarked on tax reform, we’ve seen a long parade of narrowly-tailored credits and deductions march through Congress and into the tax code. Some benefit only a handful of special interests, and others try to influence the behavior of the public-at-large. Either way, tax preparation becomes more complicated and confusing with every provision. The end result is a code ten times longer than the Bible, but without any of the good news.
The draft legislation from Ways and Means would clean up the clutter of narrowly-tailored provisions, reduce the number of brackets from seven to two, and ensure tax breaks don’t go only to those with the best accountants. What it means is 95% of filers will get the lowest possible rate just by claiming the standard deduction—that means no more saving and tracking receipts for itemized deductions. In short, tax preparation would be uncomplicated and transparent.
- We must promote new employment, increased incomes, and stronger economic growth through tax reform: At a time when Washington doesn’t seem to agree on much, we can at least agree more should be done to spur hiring, increase incomes, and promote growth. In fact, the Congressional Joint Committee on Taxation estimates the draft tax reform legislation would create up to 1.8 million new private sector jobs and increase our GDP by up to $3.4 trillion (roughly 20% of today’s economy). A stronger economy means an extra $1,300 in the pockets an average for middle-class family of four. This is exactly the sort of solution America needs.
- We must reform the tax code to make the U.S. more competitive in a global economy: Companies, both small and large, would be newly competitive in a global market under this legislation. They would be able to make investment and hiring decisions based on what makes the most business sense—not based on the best tax treatment. They would be freed from paying an army of specialized tax lawyers to ensure compliance, allowing them to invest in new buildings, machinery, and employees. We get there by simplifying the corporate tax code, lowering the top corporate rate from 35% (highest in the industrialized world) to 25% (closer to the average in industrialized countries), and abandoning the practice of fully taxing foreign profits of U.S. companies after they've already paid foreign taxes (the U.S. is currently one of the only countries that does this).
What Do You Think?