31 REASONS FOR TAX REFORM
It has been 31 years since the last major overhaul of America’s tax code, so we’re highlighting 31 ways that today’s broken tax code hurts American families, Main Street job creators, and our economy.
Our broken tax code is a drag on our economy
Our broken tax code has helped cement the slow-growth status quo of sub-2 percent economic growth. But if- as a result of tax reform - the US economy averages 3 percent growth in the next 10 years, we’d see millions of jobs created and income for a family of four would be thousands of dollars higher.
Americans spend too much money filing taxes
The burdens and complexities of our broken tax code come at a real cost to the American people. Independent estimates show that taxpayers spend a combined $99 BILLION each year complying with the individual income tax - money Americans could otherwise use on what is important to them and their families.
Americans at every income level deserve to keep more of their paychecks
Every hard-earned dollar Americans can keep from their paychecks and put towards their own American Dream is a dollar that grows our economy. That’s why Republicans are proposing to reduce taxes for all Americans at all income levels.
High rates for main street job creators
Today, small and closely held businesses create roughly half of all jobs in the United States. Yet, these businesses are currently taxed at rates as high as 44.6 percent. Starting and sustaining a small business in America is difficult enough. Our broken tax code only makes it harder by forcing Main Street job creators to send so much of their income to Washington.
The ever-growing length of our tax code
America’s tax code is now more than 2.4 million words long. That’s almost six times as long as in 1955, and nearly twice as long as in 1985.
Family-focused credits are too complicated
The tax relief provisions that are now available to help families can be incredibly confusing and difficult to utilize. For example, today there are over 12 different overlapping tax benefits related to education. Families must wade through 100 pages of instructions to figure out if they qualify for help with tuition.
Harms American manufacturing
America has some of the brightest most innovative manufacturing workers and companies in the world. That is why our “Made in America” products often set the global benchmark for quality and innovation. Yet, with the burdens of today’s broken tax code, business are encouraged to make less in America and instead move manufacturing plants and good-paying U.S. jobs overseas.
Businesses spend too much money filing taxes
Due to the vast complexity of today’s tax code, American businesses now spend an estimated $147 BILLION each year on filing businesses tax returns. That’s billions of dollars our local job creators could otherwise invest in their businesses, their workers, and their communities.
Too many tax brackets
Today’s tax code contains seven individual income tax brackets - each of them discouraging hard work by imposing higher taxes on Americans Income as they climb the economic ladder. Through tax reform, Republicans are proposing to flatten the code to just three brackets, which will better reward work and allow Americans to keep more of their hard-earned paychecks.
World’s highest corporate tax rate
America has the highest corporate income tax rate in the industrialized world. Now at 35 percent, it's at least 10 to 15 points higher than the majority of our international competitors - making it that much harder for American businesses to compete globally and create good-paying jobs here at home.
The cost of tax complexity to our economy
Today, American taxpayers - including individuals, families, and job creators combines - spend more than 8.9 BILLION hours each year complying with IRS tax filing requirements. In dollar terms, all of this time costs our economy more than $400 billion annually in lost productivity.
Creates uncertainty for families and small businesses
Businesses and middle class families cannot plan for the future, save, and make long-term investments without certainty. Today’s tax code denies them that peace of mind with punishing complexity, high tax rates, and numerous penalties on hard work - all of which weigh on the minds of Americans and drag down our nation’s economy.
Perpetuates stagnant wages
America’s tax code discourages businesses from investing in their companies and their workers, which hurts the growth of jobs and paychecks nationwide. Republicans are proposing tax reform that will unleash businesses, investment, create jobs, and grow annual take-home pay for middle-class families.
The devastating “death tax”
Today, the estate tax - commonly known as the “Death Tax” - can impose a crushing tax bill on family-owned businesses and farms when the primary owner passes away. This 40 percent tax is imposed as a second or third layer of tax on a person’s business or other assets when they are passed down to the next generation. With today's broken tax code, even death is a taxable event.
Discourages savings and investments
With all the various taxes on savings and investments, the effective tax rate on investment income can now be greater than 50 percent - penalizing middle-class Americans who save for the future, plan for retirement, and invest in our economy.
America’s broken tax code now forces our global businesses to pay U.S. tax when they bring home income earned overseas. And the U.S. tax comes on top of their taxes our companies have already paid in foreign countries. This “worldwide” taxation only makes it harder for American businesses to compete globally and create good-paying jobs here at home.
Costly compliance burdens for small businesses
The complexity of our tax code imposes a particularly severe burden on America’s small businesses. Tax compliance costs for the nearly 4 million corporations in our country are greater than $4 BILLION each year. That’s nearly $12,000 per company - money our Main Street job creators could instead use to grow their businesses and hire more workers.
Hurts america’s farmers and ranchers
From high tax rates to the devastating Death Tax, today’s tax code can impose major burdens on America’s farmers and ranchers. These hardworking Americans deserve a tax system that allows them to keep more of their hard-earned income, invest back into their business and workers, and keep their farms going - and growing - for generations to come.
Encourages businesses to make decisions based on tax breaks
Our tax code is littered with special interest breaks that encourage people and businesses to make investments decisions based on the most promising tax benefit - not the most promising innovations or enterprises. This diverts investment and resources away from American start-ups, small businesses, and Main Street entrepreneurs who truly add value to our economy.
Makes America less competitive
Today’s burdensome U.S. tax code makes our businesses less competitive around the world. And when our businesses, workers, and “Made in America” products cannot compete and win globally, the result is fewer jobs, smaller paychecks, and less economic growth here at home.
Businesses spend too many hours filing taxes
According to the independent Tax Foundation America’s job creators now spend an estimated 2.9 BILLION hours each year on filing businesses income tax returns. These are countless hours that Main Street job creators cannot devote to improving their businesses enhancing American innovation, and hiring new workers.
Traps business investment overseas
Today, America’s global companies must pay a tax penalty when they bring home profits earned abroad. As a result, U.S. worldwide businesses now hold over $2 trillion in earnings and investments overseas - money that our broken tax system discourages them from bringing home to invest in our communities and our workers.
The AMT: Double Time, Double Tax
Through the Alternative Minimum Tax (*AMT), our nation's tax code now requires millions of families and businesses to spend time and money calculating their taxes twice every year - once for their regular income tax, and a second time for the AMT. Then, adding insult to injury, these families and job creators must pay the higher of the two.
Enables a broken tax collector
Our complex and burdensome tax code only gives more power to the broken Internal Revenue Service. But, with a simpler and fairer tax code, we can rein in the IRS by allowing Americans to better understand their taxes and assert their rights as taxpayers.
Americans spend too much time filing taxes
Our nation’s broken tax code is now so complex that individuals and families are forced to spend a combined 2.6 BILLION hours each year on filing their individual income tax returns.
Drives American jobs overseas
Over three decades have passed since the last time we reformed America's tax code. While Washington has been on the sidelines, our foreign competitors have been improving their tax systems for their businesses and workers. As a result, Americans have watched their jobs move overseas to countries with more modern competitive tax codes.
Encourages “profit shifting”
Today’s tax code provides strong incentives for businesses to shift their profits overseas. This denies our country tax revenue to fund important priorities such as defense, and it disadvantages American job creators that do play by the rules. Estimates show that U.S. companies in 2012 shifted over $280 billion in profits to low tax countries - more than all large American corporations paid in U.S. taxes combined.
Enables waste, fraud, and abuse
A complex and burdensome tax code is a haven for criminals and fraudsters. For example, it only take a moment for Americans to become victims of tax-related identity theft but the crime can go undetected for long periods of time. And, when the fraud is finally discovered, it often takes months - or even years - for taxpayers to resolve the issue with the IRS and return to their normal lives.
Encourages companies to relocate overseas
Our sky-high corporate tax rate and outdated worldwide tax rules push businesses to move their headquarters overseas through the so-called “corporate tax inversions.” From 2003 to 2011, there were only nine of these relocations - a pace of just one per year. But, from 2012 to 2015, there were 22. That’s a pace of almost six major U.S. companies per year moving their headquarters overseas for tax purposes.
Complex depreciation rules for job creators
When American job creators buy new equipment or machinery, they face complex depreciation rules which allow them to write off the purchase over long - and often arbitrary - periods of time. Dealing with these complex and often confusing rules costs our businesses an estimated 448 million hours and $23 billion each year.
Favors special interests over American families
Today’s tax code contains a maze of unfair special interest tax breaks that benefit a select few while keeping rates artificially high for everyday Americans. By eliminating these costly and unfair carve-outs for Washington special interests, we can lower tax rates for all Americans and make the tax code dramatically simpler and fairer.