Congress has had a rather lackluster session so far this year. They failed to repeal ObamaCare and generally have not done anything to help the economy or the American people come out of the recession. Any economic growth has been the result of undoing regulations. That has been done by President Trump without the help of Congress. Now, as Congress comes back from their recess, it would be very nice to see them actually accomplish something. However, that is definitely wishful thinking, considering Congressional leaders and their agendas. The thing to remember here is that even though Paul Ryan and Mitch McConnell have R’s after their name, they are not Republicans who believe in the Republican platform. They are Washington establishment types who believe in big government, expanding budgets, and expanding control over the lives of ordinary Americans. They have no intention of ever having to live under the laws they passed (they made sure they exempted themselves from any changes due to the repeal of ObamaCare before they discussed repeal). Keep in mind that the biggest nightmare of the Washington establishment is a successful Trump presidency. That is one of the reasons President Trump is so viciously attacked in the mainstream media.
One of the big items on the agenda for Congress this fall is tax reform. Our current tax system is a tribute to the efforts of lobbyists. Unfortunately, many of our political leaders are in the pockets a those lobbyists, so I am not optimistic that anything meaningful will be accomplished (other than possibly convincing Americans to vote these leaders out of office).
The Daily Signal posted an article today listing some of the problems with our current tax code. The current tax code is outdated, unfair, overly complicated, and an indication of the corruption that has crept into our government over the years.
The article lists some of the major areas where change is needed:
Problem 1: Our Tax Code Is Not Pro-Growth
Our current tax code suppresses business creation, expansion, and reinvestment thanks to high tax rates. The U.S. corporate tax rate is the highest in the industrialized world, which makes it difficult for American businesses to compete with their foreign counterparts.
America’s tax code puts companies at a disadvantage by failing to allow full expensing, or the ability to allow all businesses to deduct the full cost of new capital investments such as a building, machinery, technology, etc., necessary for business creation and growth.
It also taxes companies on the profits they earn overseas, discouraging foreign investment here in the U.S. to the tune of $2.6 trillion.
Finally, the tax code punishes saving and investment through double or even triple taxation, hurting small businesses and families looking to grow their personal wealth.
The tax code needs to be changed to encourage the growth of entrepreneurship and small business.
The article lists the second problem:
Problem 2: Our Tax Code Is Too Complex
When it started in 1913, the tax code was 400 pages long. By 2013 it was over 74,000 pages.
Americans spend 9 billion hours complying with the tax code every year, which costs them over $400 billion in lost economic productivity every year. It’s critical that we don’t just cut the tax rate, but that we work to simplify it as well.
More and more tax professionals are specializing in a small segment of the tax code, such as estate tax or small business taxes or companies with large assets that depreciate.
Four hundred pages was too long, seventy-four thousand is ridiculous.
Problem number three:
Problem 3: Our Tax Code Is Full of Corporate Favoritism
Well-connected people and businesses routinely game the tax system, precisely because it’s designed that way. This leaves the majority of hard-working taxpayers at a disadvantage.
For example, Nevada agreed to give Elon Musk’s Tesla $1.3 billion in tax incentives in exchange for them building a lithium battery production plant in the state.
Timothy Carney points out that other producers of batteries were experimenting with other types of battery power, but when they found about the special interest subsidy given to lithium batteries, they abandoned their testing of those battery types and focused on producing lithium.
Not only are taxpayers having to foot the bill for nearly a quarter of this for-profit investment, but there are opportunity costs lost in what could have come out of further innovation that was halted because business owners wanted to take advantage of a tax break.
Thank God the people manufacturing buggy whips didn’t have a better lobbyists. Who knows what subsidies they would be getting!
It’s time for common sense to intervene. It is questionable whether or not Washington is capable of common sense, but if the current Congress intends to be re-elected, they need to do what needs to be done to correct the problems in our tax system. It is long past time for an overhaul and long past time for excuses.