Tax reform done right is key to boosting America’s economy

The failure to repeal and replace ObamaCare late last month and make good on almost a decade-worth of campaign promises is a big setback for the Republican party — which currently has full control of federal government for the first time since well before these promises began to be passionately proclaimed from the campaign trail.  

Even though the risk of losing that control increases every day without a major legislative accomplishment, there’s already speculation that when Congress comes back in the fall, a crowded agenda could sideline one of the best ways of mitigating that risk: tax reform, a unifying issue among Republicans because of its clear, concise, and meaningful principles.

{mosads}It’s been over 30 years since the tax code was seriously overhauled and that effort didn’t come easy; significant change to the nation’s tax system now will be an equally heavy lift. Yet it cannot be overstated how critical a swift and timely tax reform effort is before the year’s end; an absolutely achievable feat thanks to agreement between government leaders regarding fixing the tax code and jolting our economy. 

So, what are the pillars for a truly comprehensive tax reform?

First, simplification. 

The U.S. Tax Code is a monstrosity. It’s 75,000 pages long, and that number grows every year. It’s time to cut the red tape and get rid of the excess rules, regulations, and carve-outs in our current tax code.

The complexity of the tax code has made it more costly and more time consuming for individuals and businesses as it relates to compliance. According to a 2016 report from The Taxpayer Advocate Service, taxpayers spend over 6 billion hours complying with the code. That time costs money to taxpayers and our economy.

The National Taxpayers Union Foundation estimated that the cost of productivity due to compliance with the tax code is $229 billion, not counting out of pocket expenses for items like tax preparation software. Simplification would shift these resources to more productive pursuits.

Second, rates must be lowered for individuals and businesses. 

The key to strengthening our economy for years to come is making sure America can compete again around the world. That starts by lowering the corporate tax rate, as it is the highest in the developed world and has been for more than five years.

At 39.1 percent, we lead the G20 in corporate statutory tax rates. That’s not the way to grow the economy and it certainly isn’t the way to incentivize innovators and job creators to do business in America. Individuals must also see a reduction in their tax rate if the economy is to benefit. Tax reform cannot be solely focused on fixing the corporate rate; there must be relief for working families.

Consolidating brackets at lower levels than they are now is, along with simplification, essential for them to get ahead. Other measures, like elimination of the Death Tax (which passed with bipartisan support in 2015), are vital too.

Third, the IRS must be reined in. 

The agency most feared by Americans is the Internal Revenue Service, and for good reason. With just one menacing “official notice,” the IRS can destroy a small business or upend a family’s financial stability.

Any tax overhaul must include IRS reforms that reduce the agency’s penchant for intimidation, starting with additional taxpayer protections in audits, new user-friendly procedures for resolving grievances, and more permanent oversight safeguards.  This also includes a clear removal of the threat to private information, especially that of Americans participating in civic engagement.

A tax system isn’t just about rate tables and withholding forms — it should reflect, and respect, our rights as citizens too.

Finally, tax reform must be long-lasting. 

You have to go back as far as 1986 to find the last time the White House was able to work with Congress in order to get real comprehensive tax reform accomplished. It was no easy feat then and certainly the task is harder now with a greater partisan divide in Washington and more entrenched special interests hoping to keep their carve outs.

Tweaks in the code over the years and simple rate adjustments are clearly not enough. We need bold action if we are to realize a significant impact. The formula for that is rate reduction and consolidation, combined with permanent simplification.  

Speaker Paul Ryan, House Ways and Means Chairman Kevin Brady, Senate Majority Leader Mitch McConnell, and Senate Finance Chairman Orrin Hatch are all working together with the White House, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn to put forth a plan for tax reform that does all of the things listed above. The challenge now is taking action to move a plan through Congress and onto the president’s desk for his signature.

Make no mistake — if Washington keeps standing still, America will fall further behind. More than a billion additional hours are on tap in the IRS’s paperwork inventory, while the threat intensifies that more U.S. companies will “invert” overseas to lower their tax bills, as shareholders demand.

At the same time, other countries are reshaping their tax systems for the better. After three decades of tinkering with our tax structure but nothing close to meaningful reform, there is now a real chance that our tax code can finally be rewritten in order to boost the economy, incentivize businesses to compete here at home and abroad, and deliver real benefits to working families who want jobs and opportunity.  

The clock is ticking.  

Daniel Schneider is executive director at the American Conservative Union, an umbrella organization for Americans who are concerned with liberty, personal responsibility, traditional values, and strong national defense. Follow him on Twitter @Schneider_DC. 

Pete Sepp is the president of the National Taxpayers Union, an organization working for lower taxes and smaller government at all levels.

The views expressed by contributors are their own and not the views of The Hill.