|Congressman Griffith's Weekly E-Newsletter 4.24.17
Monday, April 24, 2017 â€“
â€śIn this world nothing can be said to be certain, except death and taxes," said Benjamin Franklin.
Although taxes may be certain, American families and businesses shouldnâ€™t be crushed by the tax code.
Our current tax code is so complex that a majority of families have to spend money hiring someone to help with their taxes, costing time and money.
Many of us in Congress are working to pass tax reform in order to simplify the tax code, encouraging jobs to be created and wages to rise.
To bring relief to families, we will lower the tax rate for most Americans. A few of the widely used and most beneficial deductions will remain in place, like the mortgage interest deduction, charitable giving deduction, and the child credit. But most other tax write offs and special interest loopholes will be eliminated to lower tax rates and simplify the code.
Fixing the tax code does not mean increasing taxes to bail out Washingtonâ€™s spending problem. Our tax reform will be revenue neutral. The tax cuts will be offset by transforming our tax system to include a border adjustment tax (see below) that taxes imports while exempting exports. Additionally, the tax cuts will spur economic growth, which increases revenue. Historically, when American families have more money at their disposal, the government generally sees an increase in revenue.
Americaâ€™s current tax code encourages companies to send jobs overseas. Currently, we punish corporations that make money overseas by charging a 35% tax when the money is brought back to the U.S. This has led to an estimated 2 trillion dollars to be kept overseas, instead of being invested back into our economy.
When companies bring money back to the U.S., it will provide a jumpstart to stimulating the American economy. Under the reformed tax code, companies are not slapped with a crippling tax when spending their earnings in the U.S. They can build or upgrade factories and facilities, hire new employees, or find other opportunities in the U.S.
The tax plan will also address the corporate tax rate, which is currently the highest in the developed world at 35%. A lot of companies canâ€™t afford to stay in America with this tax rate. Many companies have moved their headquarters out of the U.S. Our plan lowers the rate so we can compete with other countries around the world.
The plan also proposes to include a border adjustment tax. This means goods leaving the country will not be taxed, but when goods are made elsewhere and brought into America they will be taxed. At the same time, it will eliminate the tax on the income attributable to exports.
Some favor a value added tax (VAT) with a border adjustment feature. A VAT means that whenever a value is added to a product, the increased value is taxed. I think a VAT is too complicated and prone to future special interest loopholes.
I prefer a straight border adjustment tax.
Industrial countries around the world all have either a border adjusted tax or value added tax, except for the U.S. The next three largest economies that don't have either a VAT or border adjusted tax are Iraq, Angola, and Cuba.
I think we are better than Iraq, Angola, and Cuba. Donâ€™t you?
Implementing the border adjusted tax will stop penalizing products Made in America.
Companies that manufacture products in places that donâ€™t have hardly any work safety or environmental regulations or minimum wage laws can sell their products cheaper than products manufactured in America. This tax will help increase jobs here in the U.S. and even the playing field for American products.
Some argue that a border adjustment tax will increase the cost of goods, because the cost of cheap goods made in Asia and other places around the world will increase to account for the new tax.
But many believe the buying power of the dollar will get stronger, thus offsetting any increase. And, even if a stronger dollar doesnâ€™t completely offset the increase, most folks I know would rather have a good paying job than a cheap pair of underwear.
The tax reform plan will have many other components, including the elimination of the death tax. This is a tax on assets you receive as an inheritance. This tax historically hurts family owned businesses, including the family farm.
Our current tax code is broken.
For far too long, the tax code has punished hardworking Americans, burdened small businesses, encouraged companies to leave America, and stifled the economy.
The time for reform is now.
If you have questions, concerns, or comments, feel free to contact my office. You can call my Abingdon office at 276-525-1405 or my Christiansburg office at 540-381-5671. To reach my office via email, please visit my website at ###