The United States tax system is a disaster. It takes Americans too long to file their taxes, rates are too high, the Internal Revenue Service (IRS) has been used as a political weapon, and the code picks winners and losers. On the business side, the United States has the highest statutory tax rate in the developed world, stifling job and economic growth. It is time to rein in the federal government’s over-taxation to provide the relief to hard-working Americans that they deserve.
According to the IRS, Americans spend an average of 13 hours and $210 per return to comply with the tax code through filing a 1040, 1040A or 1040EZ form. This complicated and time consuming process often causes compliance issues for taxpayers, as it is easy to make a simple but costly mistake.
The overly complex bracket system causes further problems for Americans- there are seven different tax brackets for individuals and families, ranging from 10% to a high of 39.6%. A recent survey conducted by Harris Poll found that because of this confusing system, 46% of Americans did not know in which tax bracket they belong. This uncertainty creates financial challenges for Americans when they are planning their budgets and savings. Streamlining tax brackets would be a step in the right direction.
Furthermore, high tax rates deprive Americans of their hard-earned money for no value. The federal government has been on an irresponsible spending spree for years and now has an almost $20 trillion debt. Rather than government largess and waste, such as the numerous unnecessary spending programs that President Trump’s proposed budget seeks to eliminate, we citizens should be able to keep more of our money to spend as we choose.
Not to mention the IRS. The IRS exemplifies everything that is wrong with an out of control, abusive bureaucracy. During President Obama’s Administration, the IRS was used as a political weapon to target opposing political beliefs. Conservative organizations with words and phrases such as “tea party” or “patriot” in their names were singled out when applying for tax-exempt status. It is no wonder that the American people do not trust the IRS. We need to hold the IRS accountable for its actions, and ensure that regardless of political beliefs this type of partisan intimidation never happens again.
Then there is the issue of fairness. Numerous special interest carve-outs pick winners and losers based on their lobbying prowess. There are too many breaks for special interests in the tax code. How do breaks for alpaca farmers and companies that hire telemarketers to boost magazine subscriptions benefit you or me? How about the $6 billion subsidy you and I had to give ethanol producers for many years to make a product that nobody needs or wants, and which actually damages many types of engines.
In addition to the problems with individual tax rates, corporate tax rates place an unsustainable burden on American businesses. The 35% rate discourages companies from creating jobs at home and encourages investment overseas where corporate taxes are lower. Lower rates would incentivize business to invest in the United States and would create more jobs and stimulate economic growth.
The tax reform summary unveiled this week by the White House is an important beginning for broad-based dialogue about how best to reform corporate and individual taxation in the United States. Simplifying personal taxation and lowering the tax burden on individuals are important. Similarly, the focus on lowering rates and eliminating incentives for companies to leave the United States, or disproportionately invest and accumulate capital abroad, are critical needs.
No country has ever taxed its way to prosperity. America’s economy has always grown strongest when hardworking taxpayers get to keep more of the money they earn, and businesses have the capital available to hire more workers and invest in new technologies. Tax reform must address these core principles, along with overspending, to grow the economy at a stronger rate than the anemic 1% growth rate we have seen over the last several years.
Francis Rooney is the U.S. Representative for Florida’s 19th congressional district. He serves on the Committee on Education and the Workforce, and previously served as U. S. Ambassador to the Holy See under President George W. Bush from 2005 to 2008.