Tax reform will strengthen the nation’s economy and save Americans both time and money, conservative members of the House’s largest Republican caucus say.
“Tax reform is an opportunity to do what has not been done in 31 years, and that is to comprehensively reform our tax code to liberate free enterprise in America,” Rep. Andy Barr, R-Ky., said at a panel discussion on tax reform Tuesday at The Heritage Foundation. “The need for bold, immediate, permanent tax reform should be clear to everyone.”
Americans would save time and money with a reformed tax code, the Kentucky lawmaker said:
Americans now spend over $409 billion and 8.9 billion hours annually just trying to comply with the broken tax code, and slow growth and increased income inequality over the past several decades is a direct result of this outdated tax code that favors special interests and overseas investment over American jobs and economic activities.
Barr was joined at the event by three other members of the House Republican Study Committee: Reps. Mark Walker of North Carolina, Jim Banks of Indiana, and Jeff Duncan of South Carolina. The caucus includes more than 100 GOP lawmakers who consider themselves conservatives.
Walker, chairman of the caucus, said tax reform is not something that should be controversial.
“So, the concept of hardworking Americans keeping more of … their own money should not be a position that is offensive,” Walker said, adding:
We can contrast this to the liberal notion of taxes, and here is their two contrasting points. One, the basic economic system is unfair, and secondly, the government’s job is to level the playing field.
We have seen that there is no historical evidence that the government picking winners and losers is something that is a long-term benefit.
Senate Minority Leader Chuck Schumer, D-N.Y., tweeted opposition Sunday to the Republican framework for tax reform, saying it was a tax cut for the wealthy.
— Chuck Schumer (@SenSchumer) October 1, 2017
“We should never be in a position that we do anything based on what our friends on the left think we should or shouldn’t do,” Barr said. “And here’s what I mean by that: We want to do what is best for the American people, regardless of the positioning or the messaging they come out with.”
Reforming the tax code has been a top priority for President Donald Trump during his first year in office, and Treasury Secretary Steven Mnuchin has promised to deliver it by the end of 2017.
The approval process for the biggest Tax Cut & Tax Reform package in the history of our country will soon begin. Move fast Congress!
— Donald J. Trump (@realDonaldTrump) September 13, 2017
Banks, a freshman member of the House, said he is excited to draw on his experience in the Indiana state Senate from 2010 to 2016 in bringing tax reform to Indiana.
“I served for six years in the Indiana state Senate,” Banks said. “I worked with Govs. Mitch Daniels and … Mike Pence, as a state senator, and … we passed two rounds of tax reform that resulted in Indiana being named one of the top 10 states in the nation for business climate.”
The Indiana lawmaker said he wants to bring the success he had in the Hoosier State to the rest of the country.
Banks said he supports items in the current framework for tax reform introduced Sept. 27, such as roughly doubling the taxpayers’ standard deduction. An individual’s first $12,000 of income would become tax free; the first $24,000 for married couples.
But he said he still sees room for improvement.
“There are areas that we can make this framework even better, by eliminating the marriage penalty, by allowing full expensing to be permanent instead of just [for] five years, and focus a bit more as the framework already does with helping small businesses,” Banks said. “This is what I ran for Congress to be a part of.”
The marriage penalty in the current tax code “is the change in a couple’s total tax bill as a result of getting married and thus filing their taxes jointly,” according to the Tax Foundation.
Walker also said he wants to see the marriage penalty scrapped.
“For a family making about $30,000, a married couple, that’s $1,000 of additional taxes,” he said. “So … if we truly believe that the family unit is a huge benefit … if we believe that, then why in the world shouldn’t we do everything to promote the family, instead of penalize it?”
Expensing, which “would let businesses immediately deduct expenses from their income,” according to the Bloomberg Bureau of National Affairs, is included in the Republican tax reform framework for business purchases made after Sept. 27 and for at least five years.
“I am struck by the political justification for a five-year, full-expensing timeline,” Banks said. “I worked in business, I have an MBA, and I am not sure what business theory or concept would justify a short-term, five-year expensing window that would project real, permanent economic growth.”
Duncan said he thinks capital gains taxes should be lowered in the finalized Republican tax plan.
“Let’s look at capital gains taxes in general,” Duncan said, adding:
I told leadership that I believe it’s a ‘pay for.’
Now, how can you talk about lowering tax rates as a way to pay for tax reform? Well, if you look at the three times that we have actually done tax reform and done capital gains tax reductions, 1981, we cut the capital gains tax from 28 [percent] to 20 percent.
In 1997, the rate was cut again from 28 to 20 percent. I don’t know why we keep raising this. The Democrats in control, they want to raise rates, and they think that is the way to generate revenue … . Revenues to the federal government grew by an annual average of 17.8 percent from ’97 to 2000. So then, in 2003, we had to revisit this issue again.
The last time the tax code was updated was in 1986 with President Ronald Reagan’s Tax Reform Act, and Duncan said failing to pass tax reform is not an option.
“We can’t fail on this,” he said. “There [are] so many in America that are relying on us to make this happen, so that they can have more money in their paychecks, so that businesses can have more money at the end of the day to reinvest, or spend in the economy.