The main reason that President Trump and the Republican-controlled Congress are pursuing fundamental tax reform this year is because the American economy has not seen annual economic growth above 3% since 2005. This is an indictment of decades of unabated growth in the complexity of the tax code, devoid of any meaningful attempt to permanently reduce tax burdens for all Americans.
This year, Americans will spend billions of dollars and countless hours trying to comply with the a staggeringly complex, 70,000-page, federal tax code. This is an effective tax on top of what Americans and their businesses owe.
The IRS’ own Taxpayer Advocate Service lists tax code complexity as one of the most serious issues facing taxpayers. Every dollar and hour spent attempting to avoid the wrath of the IRS is one less creating jobs that actually grow the economy, not subsidize accountants and lawyers.
The tax code is also oppressive in terms of its direct impact. American businesses face the highest corporate income tax rate in the industrialized world, north of 40% when factoring in state taxes. And Congress has increasingly used the tax code to micromanage the economy and pick winners and losers. The purpose of taxes is to fund the essential functions of our government laid out in the Constitution, not to allow government to play favorites in the private sector.
This week, FreedomWorks released our six principles for fundamental tax reform. Two of the principles President Trump effectively hits hardest are lowering individual tax rates and reducing corporate tax rates. With a greater standard deduction for individuals and a dramatically slashed rate for corporations, this idea is on track to see economic growth of 3% to 4% and put the American economy back on track.
In sum, Americans not only need tax relief, they also need tax certainty. Americans can’t take the long-term risks necessary to grow the economy if they can’t count on being able to keep their hard-earned money and not fall victim to ever-changing rules.
Adam Brandon is the president of FreedomWorks, a group that advocates for limited government and free markets.
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