It is Time to Reform America’s Tax Code
The United States tax code is broken and desperately in need of repair to work better for the American worker. Our tax code is complicated, with seven brackets and countless rules, resulting in an overcomplicated and confusing maze. Our tax code is uncompetitive globally with companies, jobs and liquidity moving abroad. There is absolutely no better time than the present for bold, pro growth reform that improves our business climate, and creates more good paying, private sector jobs.
America is the greatest nation in the world because we give our citizens the opportunity to work hard and succeed on one’s own merit. However, a burdensome and confusing tax code strips away this opportunity, and it will only get worse unless we take action to fix it. The solution is simple: a tax code that is flatter, fairer, and spurs investment and job creation in the United States instead of overseas. With a new President and Congress, we have the opportunity to reform and simplify our broken tax code so that more Americans can do their taxes on a form as simple as a postcard. We have a once in a generation opportunity to build a tax code that focuses on simplicity and fairness for individuals and families, and growth and job creation for the businesses that keep our nation’s economy moving.
President Ronald Reagan’s words decades ago about our nation’s tax code still ring true today. He described the code as full of “loopholes designed for those with the power and influence to hire high-priced legal and tax advisers” and he was right. Anyone who has ever filled out a tax form knows that the entire system is a convoluted mess that needs to be simplified. On top of this, the structure allows for special interest breaks while the average American family struggles to make ends meet. The obvious solution is to reduce the reliance on an endless list of complicated deductions and credits that benefit one special interest over another and confuse the average taxpayer. The goal should be for more hardworking families to actually see the fruits of their labor.
A higher standard deduction is being proposed as part of the solution. This would mean less paperwork and time wasted for taxpayers. A higher standard deduction results in a smarter, simpler way to deliver tax savings that doesn’t pick winners and losers. Important deductions that hard working families rely on like the mortgage interest deduction, charitable contribution deduction, and credits for childcare and education will be strengthened by a fairer and clearer tax code. For example, there are currently 15 various provisions in the tax code covering higher education, instead of one clear and simple credit that will help families afford their most important investment. Reforming confusing deductions and closing loopholes will translate into lower tax rates for all Americans.
Navigating the confusing tax code is a drain on the growth, investment, and job creation opportunities that business owners want to inject into our local economy. In theory, the current code rewards a business owner when he or she invests in new equipment, facilities, or research and development, allowing them to write-off those expenses over time through depreciation. The system of depreciation schedules, however, is a confusing mess. Our economy can advance further by doing away with depreciation schedules altogether and replacing it with a zero tax rate on all new business investment. This presents a historic opportunity for job creation and growth for American businesses and the American economy.
We also need to make our tax code more competitive globally. The United States is the world’s leading economy, and yet we have the highest corporate tax rate in the industrialized world at 35%. Furthermore, our tax code currently pushes jobs overseas, hurting our businesses and driving out good paying private sector jobs. We must reform the code to allow our manufacturers to compete abroad and create more “Made in America” products. Our broken tax code incentivizes the import of cheap foreign products but doesn’t do enough to help our manufacturers or farmers export their products. The solution is simple: we have to lower the corporate rate to make America competitive on the global market again. Also, when our code is reformed to be globally competitive, we’ll see billions in assets that are currently “stranded” overseas come home to create jobs and help grow the economy. We may also be able to use some of those repatriated funds to repair our nation’s infrastructure as well. The tax code should be globally competitive and pro-growth, first and foremost. We must have a tax code that rewards hard work, investment, and innovation.
Reforming the tax code so it works in favor of, not in opposition to, the American worker is one of my top priorities for the new term in Congress. While there is much work ahead to make necessary improvements, I am optimistic of what we can accomplish in the coming months and years. We must always put the needs of our nation first, and I will continue to pursue solutions which simplify our tax code and strengthen our economy.
Congressman Lee Zeldin, member of the House Financial Services Committee, represents the First Congressional District of New York.