President Donald Trump began his push for tax reform with a speech in Missouri earlier today.
Trump said the four principles of his tax reform plan would be:
- We need a tax code that is simple, fair, and easy to understand. This means getting rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests.
- We need a competitive tax code that creates more jobs and higher wages for Americans. It’s time to give American workers the pay raise that they’ve been looking for many, many years.
- We need tax relief for middle-class families. We will lower taxes for middle-income Americans so they can keep more of their hard-earned paychecks.
- We want to bring back trillions of dollars in wealth that’s parked overseas. By making it less punitive for companies to bring back this money, and by making the process far less bureaucratic and difficult, we can return trillions and trillions of dollars to our economy and spur billions of dollars in new investments in our struggling communities and throughout our nation.
Trump said the United States’s tax competitiveness has fallen behind other developed countries since Reagan’s tax reform plan in 1986.
In 1986, Ronald Reagan led the world by cutting our corporate tax rate to 34 percent. That was below the average rate for developed countries at the time.
Everybody thought that was a monumental thing that happened. But then, under this pro-America system, our economy boomed. It just went beautifully — right through the roof. The middle class thrived and median family income increased.
Other countries saw the success. They looked at us. They saw — what is America doing? What’s happening with the United States? And they acted very swiftly by cutting their taxes lower, and lower, and lower, and reforming their tax systems to be far more competitive than ours.
Over the past 30 years, the average business tax rate among developed nations fell from 45 percent to less than 24 percent. And some countries have an unbelievably low tax, including, by the way, China and some others that are highly competitive, and really doing very well against us. They are taking us, frankly, to the cleaners. So we must — we have no choice — we must lower our taxes.
All four members of Arkansas’s House delegation stated earlier this month that they support reforming the nation’s tax code.
President Trump’s focus on reforming the federal tax code is welcome; more than three decades have elapsed since major improvements have been made in it — although just about every year since 1986, it has become more complex and convoluted. If President Trump could lead Congress to major tax reform, it would be an extraordinary — and praiseworthy — policy achievement.
State legislators are also in the process of analyzing how to lower and reform taxes in Arkansas. Check back here tomorrow for our coverage of the Joint Committee on Economic and Tax Policy meeting at 10 a.m. tomorrow in Room B of the MAC building in the State Capitol — featuring, in part, our recommendations for state tax reform! If you’re curious, see our new book — featured at advancearkansas.org.