This week the President has been focused mainly on two different issues.
One came up suddenly, when Hurricane Harvey slammed into the Texas coastline and wreaked havoc from Texas to Louisiana.
The other has been percolating for quite some time – tax reform. President Trump and the conservatives in Congress had hoped that the first step in getting major tax reform passed would be repealing Obamacare. Repealing Obamacare would have been a massive boon to the tax reform push because Obamacare is such a massive burden on the American taxpayers. Simply repealing Obamacare would have gotten Congress more than halfway to fixing our currently ridiculous and overwhelmingly complex tax problems.
Sadly, Obamacare was not repealed and now the tax reform problem is as complex as ever. That doesn’t mean that President Trump and the conservatives in Congress aren’t going to try to overhaul our broken system, it just means that the job will be exponentially harder to do.
Trending: Fuel for Thought
Early Wednesday the administration released this framework for what they planned to accomplish over the next few months:
PRESIDENT DONALD J. TRUMP TACKLES OUR BROKEN TAX SYSTEM
“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.” – President Donald J. Trump
AN AMERICA FIRST TAX SYSTEM: President Donald J. Trump is working to reform our tax system so that Americans are treated fairly and can keep more of their hard-earned money, and companies can bring jobs back to the United States.
- President Trump will jumpstart America’s economic engine by making it the most desirable country in the world for businesses to invest and grow.
- By lowering taxes, President Trump is helping boost take-home pay for all American workers.
- President Trump will restore fairness to our tax system by simplifying the tax code and closing special interest loopholes.
- Making our tax code competitive puts the American economy and the American worker first.
A BURDEN ON AMERICAN TAXPAYERS: The current tax code has grown out of control in length and complexity so that many Americans must rely on professional help to file even the simplest return.
- The tax code has increased so much in length and complexity that hundreds of pages in instructions are necessary to file even the most basic tax returns.
- The typical Form 1040, used by most American families, has grown to 79 lines from only 34 lines in 1935, according to the National Taxpayers Union.
- The instructions alone for the form has grown to 241 pages from just 2 pages in 1935.
- The tax code is over six times as long as it was in 1955, according to the Tax Foundation.
- A complex and ever changing tax code is unworkable for most Americans, forcing them to spend too much of their time and income on paid professionals and filing aids just to pay their taxes.
- Taxpayers spend over 6 billion hours annually complying with the tax code, according to the IRS’s Taxpayer Advocate Service.
- Just to comply with the tax code puts a $262 billion burden on the economy, according to the National Taxpayers Union.
- Over half of all tax returns filed in 2017 were prepared by a tax professional, according to the IRS.
- 94 percent of taxpayers paid someone or used software to prepare their returns, according to the National Taxpayers Union.
- 91 percent of small businesses hired a professional to do their taxes, according to the National Federation of Independent Business.
- The Form 1040 tax return used by most Americans costs $176 to complete with the average accounting firm, according to the National Society of Accountants.
- Small businesses incur between $15 and $16 billion on tax compliance costs, according to the National Federation of Independent Business.
- It is no wonder that, according to IBISWorld, the tax preparation industry earned $10 billion in revenue in 2016.
HARMING AMERICAN JOB-CREATORS: Our outdated tax code makes our businesses uncompetitive as other nations provide lower tax rates, and incentivizes American businesses to move their headquarters or offshore jobs.
- The United States now has the highest corporate tax rate among the 35 advanced economies in the Organisation for Economic Co-Operation and Development (OECD).
- The combined corporate tax rate in the United States is now 39 percent, according to OECD data, compared to an average of 24 percent among OECD member countries.
- China, the United Kingdom, Germany, Canada, and Australia all have lower corporate tax rates than the United States.
- As rates fell across the developed world from the early 1990’s to 2016, the United States’ corporate tax rate increased.
- The United States’ corporate tax rate is 16.4 percentage points higher than the worldwide average, according to the Tax Foundation.
- Businesses are moving their facilities and jobs out of the country to escape our burdensome tax code.
- The money American businesses earn overseas is being kept out of the country to avoid our high corporate tax rate.
- Since 2014, there has been an increase in inversions as American companies try to avoid the incredible disadvantages of our corporate tax system.
- Fortune 500 corporations are holding more than $2.6 trillion in profits offshore to avoid $767 billion in Federal taxes, according to the Institute on Taxation and Economic Policy.
Then on Wednesday night President Trump travelled to Springfield, Missouri to pitch his plans directly to the American people from the American heartland.
The President wants to simplify the tax code, he wants to provide tax relief for the middle class, he wants to make the tax code more competitive so that businesses move from abroad back to America, and finally he wants to stop punishing businesses for doing well and provide incentives for them to keep their money here instead of taking it abroad.
Partial Transcript from RCP:
We’re here today to launch our plan to bring back main street by reducing the crushing tax burden on our companies and on our workers.
Our self-destructive tax code costs Americans millions and millions of jobs, trillions of dollars, and billions of hours spent on compliance and paperwork.
And you have seen what’s happening with regulations: They’re going fast. We need regulations, but many of them are necessary, and they are going fast.
That is why the foundation of our job-creation agenda is to fundamentally reform our tax code for the first time in more than 30 years. I want to work with Congress, Republicans and Democrats alike, on a plan that is pro-growth, pro-jobs, pro-worker and pro-American…
Here are my four principles for tax reform.
First, we need a tax code that is simple, fair and easy to understand.
That means getting rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests…
Second, we need a competitive tax code that creates more jobs and higher wages for Americans. It’s time to give American workers the pay raise that they’ve been looking for for many, many years…
The third principle for tax reform is a crucial one: tax relief for middle-class families…
We will lower taxes for middle-income Americans so they can keep more of their hard-earned paychecks. And they can do lots of things with those paychecks. And that really means buying product — ideally made in this country. But that means they’ll go out and they’ll spend their money. And it will be a beautiful thing to watch…
Fourth and finally, we want to bring back trillions of dollars in wealth that’s parked overseas.
Because of our high tax rate and horrible, outdated, bureaucratic rules, large companies that do business overseas will often park their profits offshore to avoid paying a high United States tax if the money is brought back home. So they leave the money over there.
The amount of money we’re talking about is anywhere from $3 trillion to $5 trillion. Can you believe that?
By making it less punitive for companies to bring back this money and by making the process far less bureaucratic and difficult, we can return trillions and trillions of dollars to our economy and spur billions of dollars in new investments in our struggling communities and throughout our nation.
It’s time to invest in our country, to rebuild our communities and to hire our great American workers…
All of this comes as the nation enjoys our best economic quarter in over two years and as some in the media notice that since President Trump’s election the economy has done nothing but accelerate…
The U.S. economy grew faster than initially thought in the second quarter, notching its quickest pace in more than two years, and there are signs that the momentum was sustained at the start of the third quarter.
Gross domestic product increased at a 3.0 percent annual rate in the April-June period, the Commerce Department said in its second estimate on Wednesday. The upward revision from the 2.6 percent pace reported last month reflected robust consumer spending as well as strong business investment.