|Congressman Griffith's Weekly E-Newsletter 10.2.17
Monday, October 2, 2017 â€“
Tax Reform Delivers for the American People
Benjamin Franklin famously noted that â€śin this world, nothing is certain except death and taxes.â€ť He may have been right that taxes are a certainty, but thereâ€™s no reason why they have to be as complicated as the current U.S. tax code makes them.
Itâ€™s been over thirty years since the last major tax reform, and the tax code hasnâ€™t kept up with the times. Instead, it has grown in complexity. The only thing our tax system does well is befuddle the taxpayer.
But President Trump and congressional Republicans have a framework to change this state of affairs. If implemented, the framework would make your taxes lower, fairer, and simpler.
The framework replaces the current seven tax brackets with three brackets of 12%, 25%, and 35%. These brackets would lower rates for most people, and those in the current codeâ€™s 10% bracket are expected to have a 0% rate. Many deductions that have accumulated over the years, generally for higher-income earners, are eliminated and replaced with a larger standard deduction and child tax credit. As a result, rates are lower and filing is simpler, enabling people to keep more of their money
Our goal in revamping the tax code isnâ€™t just to boost the economy, but to encourage businesses to keep their operations in America. The current tax code is not the only reason companies look abroad to establish headquarters or manufacture goods, but it is one of the major reasons. Thanks to the current tax code, businesses have incentives to move their operations elsewhere. The current corporate tax rate of 35% is the highest in the developed world. Further, when companies make money overseas and leave it there, they arenâ€™t taxed, but if they want to move their earnings back to the U.S., they get a hefty tax bill.
With this crazy system, you get stories like Burger Kingâ€™s 2014 merger with the Canadian company Tim Hortons. Although Burger King was the larger chain, with 13,667 restaurants compared to Tim Hortonsâ€™ 4,546 restaurants, the merged company decided to be headquartered in Canada in part because Canada has a lower corporate tax rate. The business financial papers in the last several years have been filled with stories of other American companies merging with smaller foreign companies and moving their headquarters out of the U.S. in order to pay lower corporate taxes.
The framework would instill sanity into this system. Companies wanting to bring investment money back to the U.S. from other countries could do so through â€śrepatriation,â€ť in which they pay a low one-time tax on money returned from abroad. The corporate tax would be lowered, making the U.S. more competitive, but most corporate-style deductions would be eliminated.
Family-owned businesses would also benefit from the frameworkâ€™s elimination of the death tax. The government taxes you when you buy land or equipment, it taxes you while you own it, and then when you die, it taxes your family merely because you were inconsiderate of the governmentâ€™s needs and passed away. The Ninth District has family farms and small businesses which are valued above the death taxâ€™s 2017 exemption. In a recent TV interview, I was asked to name one family farm that was concerned about the death tax. Although I couldnâ€™t name one instantly, I know of several, one of which is Highland Dairy Farm in Washington County. Family businesses and family farms should not have to be sold upon the death of a parent in order to pay the Federal Governmentâ€™s death tax.
Opponents of tax reform claim that the framework will only benefit the wealthy, but their view of taxes and the economy doesnâ€™t reflect reality. Under the present system, it is the wealthy who can afford to hire lawyers to find loopholes to exploit and/or move their assets abroad. Average Americans are left trying to figure out what our mess of a tax system means for them. Simplifying the tax code means making it easier to figure out how much you owe and fewer ways to get around paying reasonable taxes. The larger standard deduction helps all middle- and lower-income families.
This tax framework is good for Main Street. It helps level the playing field between small businesses and large corporations. It lets average Americans keep more of their money. It encourages companies to keep their operations in America instead of shipping them overseas.
The tax reform framework will deliver a tax system that supports the industry and dynamism of the American people.
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 ###