This week President Trump and Congressional Republicans will unveil their tax reform proposal and begin the grinding work of overhauling America’s complex and burdensome system. When it comes to economic growth and job creation there is no greater priority than tax relief for working class Americans before the end of the year. Not surprisingly Democrat leaders Schumer and Pelosi have come out strong against Republican tax reform efforts with charges that the GOP is giving tax breaks to the rich. This is a sad and familiar refrain. One that looks foolish in the face of the facts and the promise of President Trump and Congressional Republicans that tax relief will be centered on the middle class and working families.
Fortunately, if Congressional Republicans can maintain unity they can deliver tax relief to the American people with or without help from liberal Democrats in Congress. In a positive sign for the effort, the House and Senate GOP rallied to pass an FY 2018 budget. In doing so they set up a process called “budget reconciliation.” For purposes of tax reform this means that, should Congressional Democrats continue to oppose tax relief efforts Republicans can pass tax reform with simple majorities in the House and Senate.
As of now there is little sign that Congressional Democrats are willing to abandon their class warfare tactics and join the GOP in providing relief to the American people. Nancy Pelosi has called the GOP tax relief proposal “Armageddon.” Chuck Schumer is using the class warfare playbook in accusing the GOP tax relief plan as a give-away to big corporations and the wealthiest Americans. The senseless rhetoric from the left goes on-and-on. Let’s look at the facts. The GOP proposal would do the following:
- Simplify the tax code for all Americans, reducing the number of brackets from seven to three – 12 percent, 25 percent and 35 percent. President Trump has also proposed a potential fourth tax bracket for those earning over $1 million annually.
- Doubles the standard deduction and enhances the Child Tax Credit.
- Eliminates loopholes for the wealthy and protects key tax provisions for the middle class such as the mortgage interest deduction, deductions for charitable contributions as well as tax incentives for work, higher education and retirement security.
- Repeals the death tax and the AMT.
- Lowers tax rates on family businesses to 25 percent.
- Levels the playing field for US businesses by establishing a 20 percent corporate tax rate. Today, the average corporate tax rate among foreign competitors is 22.5 percent. The current US corporate tax rate is 39 percent.
- Allows businesses write off expenses in the first year which will spur investment, creating jobs and economic growth.
- Allows companies to bring home billions in profits that are stranded of-shore due to prohibitively high US tax rates.
Congressional Republicans will release draft legislation this week and move to mark-up that bill next week. They expect to bring tax relief legislation to the floor of the House of Representatives before Thanksgiving with the Senate to follow. The goal is to send tax cut legislation to President Trump before the end of the year. This would provide hard working Americans desperately needed tax relief in time for the 2017 tax-filing deadline. Congressional Democrats will continue the class warfare rhetoric, once again attempting to pit American against American in a desperate effort to regain political power. It will be up to President Trump and the GOP to hold the line against these cynical and dishonest attacks. And it will be up to all of us to hold both Republicans and Democrats accountable for getting the job done.
According to the Tax Foundation in 2016 the average American paid more federal, state and local taxes than on food, clothing and housing combined. Collectively, Americans worked over half the year, April 24th, to pay this staggering tax burden that includes $3.3 trillion in federal taxes, $1.6 trillion in state and local taxes for a combined total of nearly $5 trillion. This is madness.
For too long our elected officials have put their political interests ahead of the American people. The vacuum of their inaction has seen a staggering growth in the cost and size of government at the expense of hardworking Americans. Enough is enough.
John T. McNabb is vice chairman, American Leadership Council. co-founder, Trump Leadership Council and Former Chairman and CEO, Willbros Group.