The tax reform train continues to roll. This week, Congressional leaders and members of the Trump administration—the “Big Six”—released a tax reform framework.
One member of that team—House Ways and Means Chairman Kevin Brady (R-TX)--told business leaders at the U.S. Chamber “tax reform is all about delivering more jobs, bigger paychecks, and fairness.”
Tax reform means bigger paychecks
Tax reform will mean biggers paychecks for workers: “Our goal is to truly unlock the growth of paychecks nationwide. To do that we’ve got to unleash business investment.”
The framework “offers businesses the ability to fully write-off purchases of new equipment they need to produce and compete in a high level in year one.” This will make is easier for businesses to invest in their workers. More business investment will make workers more productive leading to higher wages and more take-home pay.
Businesses will be more competitive
For businesses, Brady said, tax reform will result in “the lowest tax rates in modern history for American businesses of all sizes and all structures,” creating “a more level playing field where [businesses] can succeed and grow.”
The proposal would reduce the corporate tax rate to 20%--down from 35%--and reduce the rate for passthrough businesses—which most small businesses fall under—to no more than 25%--down from a combined federal and state rate of as high as 45%.
The framework also calls for moving to a territorial tax system that most industrialized nations use for taxing income by American companies overseas.
These components would make “our tax code the most competitive in the world,” Brady said.
In addition, the framework proposes a simpler, fairer tax system. The number of individual tax brackets would be reduced from seven to three. The Alternative Minimum Tax for both individuals and businesses would be repealed, saving people from having to calculate their taxes twice each year. Also, the framework proposes to eliminate the estate tax. Rep. Brady explained how he saw first-hand how small business owners and farmers have had to take extreme measures, like taking out bank loans just to pay the tax.
The House Ways and Means Chairman summed up the tax reform effort like this:
If we want to unleash the vast potential of this nation through tax reform, I’m convinced we have to start by unleashing the individual potential of every American. By giving you the chance to put your talents into action, to build a better life for yourself and your family, allowing you to pursue your own American dream – whatever that may be – and make it a reality.
Rep. Brady then made an ask to the business community. While praising the input and response during many years of discussions of comprehensive tax reform, he urged business leaders to continue the conversation with Congressional leaders and the public as the legislation is drafted. “Business have a crucial role to play. Without biz leadership tax reform won’t happen,” he said.
The business community is fully on board. “The Chamber strongly agrees with the chairman that pro-growth tax reform is the most important way we can help Main Street job creators,” said Suzanne Clark, Senior Executive Vice President, U.S. Chamber of Commerce.
We’ve been preparing for this moment for years, and we’ve intensified our efforts over the past several months—mobilizing our grassroots network all across the country, bringing small business leaders to Washington to lobby their members of Congress, and going on the airwaves to highlight the urgency of tax reform in the states and districts of key lawmakers.
The business community was instrumental to passage of tax reform 31 years ago, and we will work tirelessly to achieve it this time too.
The next step is to build a legislative runway for tax reform to land on. Congress has to pass a budget resolution that contains reconciliation instructions to prevent reform from being bottled up in the Senate. The U.S. Chamber and 241 associations and state and local chambers of commerce want that to happen now:
While much work remains to be done, we believe Congress is well-positioned to move forward with comprehensive, pro-growth tax reform.
The single-most important next step is for Congress to adopt a budget resolution with reconciliation instructions that will permit tax reform to move forward without the threat of a filibuster.
Just like Members of Congress, each of our organizations will continue to advocate for specific priorities within tax reform as the relevant committees and ultimately the full House and Senate consider tax reform legislation.
But failing to pass a budget resolution now may mean that tax reform never moves forward. That outcome is unacceptable to all of us and ought to be unacceptable to every Member of Congress who has advocated for reform.
This week was an important step in getting our country the tax reform it needs. Both Washington and the business community are focused on achieving this once-in-a-generation goal.
A faster-growing, stronger economy with higher-paychecks is a closer to reality. Let’s get this done.