District Connection - 8/15/16
I want to take a moment this week to draw your attention to something that affects every American household and business, including hundreds of thousands of our friends and neighbors in the 7th District of Georgia: taxes. Too often, the farther away from April 15th we get, the less we think about the scourge that is our income tax code, but if you know anything about me, you know that I have a passion for tax reform.
The U.S. tax code is one of those self-inflicted wounds that restricts the opportunity of every American family and every American small business. The world is getting smaller; money can move quickly from one nation to the next; businesses can move quickly from one nation to the next; and all the while, America is rated as having the single most punitive and destructive tax code on the planet. We both know that America can do better.
The House has already been at work improving the code. In fact, believe it or not, in this Congress, we have been able to make tax cuts permanent that even President Bush couldn’t push through in his tenure. But when America still ranks nearly last among the world’s developed nations in tax competitiveness, and American jobs and investments continue moving to nations with less burdensome tax codes, it’s never been clearer that tinkering with our tax code won’t get us the results we need. It’s time for wholesale reform, and we are closer than ever to achieving that goal!
I’ve long been an advocate for throwing out our current tax code and starting over with the FairTax, which is a tax reform plan that would eliminate our income tax system – along with the payroll tax and every loophole and deduction – and replace it with a consumption tax. While there aren’t 218 votes in the House or the 60 votes in the Senate to pass the entire FairTax bill, there is still some very good and encouraging news to share. Our work has not gone unnoticed, and in fact, the FairTax movement has had an extremely significant impact on the tax reform debate and the tax reform blueprint released by House Ways and Means Committee Chairman Kevin Brady (R-TX).
In fact, there are a number of fundamental FairTax principles in his plan. The plan even refers to the abolition of the IRS exactly as it’s envisioned in the FairTax plan, labeling the FairTax as one of several “serious ideas for pro-growth tax reform.” On the individual side of the code, the blueprint consolidates the current seven tax brackets into three. The blueprint takes a page out of the FairTax plan by totally eliminating the estate and gift taxes, the alternative minimum tax (AMT), and every itemized tax deduction except those for mortgage interest and charitable contributions. The House blueprint also alters the treatment of capital gains, dividends, and interest income in an effort to encourage – rather than punish – savings and investment, and it simplifies tax filing for families by merging the five basic family deductions into two and streamlining the more than one dozen current education tax benefits. The blueprint’s elimination and consolidation of so many tax credits and deductions should enable Americans to file their taxes on a form the size of a postcard. The next step is to pass the rest of the FairTax and eliminate the postcard too, and we are making real progress toward that goal.
FairTax supporters understand that business taxes are simply hidden taxes on consumers, and it’s exciting that the House tax reform plan embraces that logic. By reducing these hidden taxes on consumers, Americans will see stronger economic growth, more jobs, and higher wages. The blueprint begins by reducing the tax rate on small businesses organized as pass-through entities from a rate as high as 44.6 percent to 25 percent and provides immediate, full expensing for the cost of capital investments. It then tackles our job-killing corporate tax system by reducing the overall rate from 35 percent to 20 percent, repealing the corporate AMT, and eliminating every business tax credit except the R&D tax credit. The House tax reform plan also enacts a deemed repatriation for all deferred corporate profits at a one-time rate of 8.75 percent and moves the U.S. to a fully territorial system, meaning U.S. companies could bring foreign earned profits back home to invest without paying additional U.S. taxes.
I hope that you will take a closer look at the House tax reform blueprint and share your feedback. And if you are a fellow FairTax supporter, you should feel affirmed that the fingerprints of the FairTax are all over this reform plan. Like me, many people want all of the FairTax right now, but I’m willing to get it a piece a time as well. It’s certain that in the coming months, folks from Main Street to K Street will come to Capitol Hill in an effort to reclaim abolished exceptions, exemptions, carve outs, and favors. Resisting that pressure and preserving the FairTax-principled victories in the House blueprint is essential if we are going to ensure that America keeps moving forward.
As such, I encourage you to "save the date" on your calendars now for my next telephone town hall meeting on September 6th at 7:30pm. We will discuss the House tax reform blueprint, the FairTax, and any other tax reform ideas that you have. You can find further information on my website soon. Please join me!
Member of Congress