“America’s tax code is broken and must be reformed. In the quarter century since the last comprehensive tax reform, Washington has riddled the system with countless tax expenditures, which are simply spending by another name. These tax earmarks – amounting to $1.1 trillion a year of spending in the tax code – not only increase the deficit, but cause tax rates to be too high. Instead of promoting economic growth and competitiveness, our current code drives up health care costs and provides special treatment to special interests. The code presents individuals and businesses with perverse economic incentives instead of a level playing field.” – National Commission on Fiscal Responsibility and Reform (Simpson-Bowles)
Too complicated – Our current tax code is over 77,000 pages and most Americans are often intimidated by it.
Tax Rates are too high – Congress has put in so many loopholes to protect their special interest campaign donors it’s not wonder our tax rates are too high.
Not Enough Tax Payers – According to the National Taxpayers Union the top 50% of income tax filers paid 97.75% of all personal income taxes.
People with disabilities and seniors living on Social Security are part of the bottom 50% and they should not have to pay income tax on their benefits.
However, we need to create an environment where more people are paying in to the system. We need to draw in those who should be paying taxes yet are not due to loopholes in our system; everyone eligible should be paying their fair share.
Kills Jobs and Economic Growth – Our current tax code has created incentives for business to produce their products overseas.
In order to bring our jobs back we must make America attractive for private investment.
Solutions must include:
Lower the rates and broaden the base- Lower rates can be achieved by getting rid of loopholes. The tax code should still be graduated. Currently, we have high tax rates but very few actually pay the high rates because of so many loopholes and deductions.
Simplify the Code: The framework outlined in Simpson-Bowles is a good start and there are a number of other proposals that have to be part of the discussion. I agree with many Americans that the tax code must be simplified.
Switch to a Territorial Tax System- Punishing corporations who do business overseas hurts Americans who are looking for work.
When American corporations are more profitable producing their products overseas because of taxes then it is the government and our system that is forcing their move overseas. The result will be less middle class jobs for Americans.
It’s up to us to help make American more competitive. We can win the future by removing tax barriers and letting our firms put overseas profits to work right here in America. This can be a natural stimulus plan that requires no subsidies and offers real jobs right now.