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Tax Reform in America “Just the Facts”

While the debate over tax reform rages, some might wonder why there needs to be reform in the first place

tax reform

Regardless of their political affiliation, everyone is subject to paying taxes. So, tax reform in the United States has the potential to impact just over half of all Americans directly. The current tax code includes some common sense rules. Furthermore, an exception to some rules is warranted at times. However, the potential for an exception to the exception exists, causing confusion and higher stress levels. Although plenty of debate encompasses the tax reforms introduced by President Trump, the why behind the need for sweeping changes is not getting as much attention.

The many arguments surrounding the tax reform challenges are not without validation. However, according to The Washington Examiner, at least four deserve prompt attention.

  • Although most Democrats gladly welcome the corporate tax reform framework of fewer deductions and lower rates, they reject any reduction in the 39.6 percent top tax rate for individuals. After all, they spent nearly a decade fighting to restore it after President George W. Bush reduced it to 35 percent.
  • Another contrast between the two parties includes more or less revenue. Republicans want to cut revenue. However, Democrats want tax reform to be either revenue-neutral or revenue-raising.
  • The U.S. is one of the few countries that place a levy on multi-national companies’ profits from abroad. Although the German, French, and American subsidies pay the 19 percent British corporate tax rate on items sold in Great Britain, America is the only country that charges its British subsidiary an added 16 percent. American companies have kept their profits abroad indefinitely instead of reinvesting it.
  • The political challenge is that hopefully, the two parties can cooperate in good faith. Americans are willing to support tax reform as long as the proposals encourage competition, job growth, and simplification and not another show of anti-bipartisan bickering.

The simple fact is Americans need tax reform. President Trump says, “We believe every-day Americans know better how to spend their own money than the federal bureaucracy, and we want to help them keep as much of that hard-earned money as we can.” According to NBC NEWS, the complete details of the tax reform plan will be revealed on Wednesday, November 1, 2017. However, top GOP leaders admit to a tough road ahead of them, despite their ability to overcome a significant hurdle last week with the final passage of their budget. The significance of the budget passage unlocks a legislative rule that will shield the tax plan from a Democratic filibuster.

It’s been over thirty years since the last significant tax reform took place in the U.S. President Reagan said, “You can’t’ be for big government, big taxes, and big bureaucracy and still be for the little guy.” That statement catalyzed the Tax Reform of 1986, which stands as the highest display we’ve ever seen of bipartisan federal income tax policy. Shortly after its enactment, millions of Americans and businesses experienced significant relief. Subsequently, the nation had a simpler tax code with significantly lower rates, fewer loopholes, and exemptions.  Now, according to Fox News, Congress and the Trump administration have an opportunity to spark and build and economic legacy.

By Jireh Gibson

Sources:

FOX NEWS: Big tax cuts could spark America’s greatest economic growth since 1980s
NBC NEWS: Five Issues That Could Sink the Trump-GOP Tax Plan
Washinton Examiner: The four challenges of tax reform
Top Image Courtesy of Pictures of Money Flickr Page – Common Courtesy License
Featured Image Courtesy of Got Credit’s Flickr Page – Common Courtesy License

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