U.S. Sen. John Thune (R-S.D.) today discussed how the GOP’s plan to reform the business side of the tax code will increase Americans’ pay and give them access to the kind of jobs, wages, and opportunities that will set them up for a secure future.
Thune’s remarks (as prepared for delivery):
“Mr. President, I don’t need to tell anyone that middle-class Americans have had a rough time in recent years.
“Stagnant wages and a lack of opportunities have left many American families stretched thin.
“Sending the kids to college, a secure retirement, putting something away for a rainy day … for too many families these hallmarks of the American dream have started to seem more and more doubtful.
“A recent survey found that 50 percent – 50 percent – of voters consider themselves to be living paycheck to paycheck.
“And about one-third of voters say they are just $400 away from a financial crisis.
“Mr. President, if anyone wants to know why we’re taking up tax reform, this is why.
“We’re taking up tax reform because it’s not acceptable that 50 percent of Americans are living paycheck to paycheck.
“And because it’s not acceptable that one-third of voters are one unexpected car repair away from a financial crisis.
“So how is tax reform going to help?
“Well, for starters, our tax reform bill is going to make sure that hardworking Americans are taking home more money from every paycheck.
“We’re going to cut income tax rates.
“We’re going to double the standard deduction – the amount of Americans’ income not subject to any income tax.
“And we’re going to significantly increase the child tax credit.
“All these things mean that American families are going to see an increase in their take-home pay.
“They’re going to get to keep more of their hard-earned money.
“We’re also going to simplify and streamline the tax code so that it’s easier for Americans to figure out what benefits they qualify for, and so they don’t have to spend a lot of time and money filing their taxes.
“But we’re not going to stop with reforming the individual side of the tax code.
“Another key part of improving Americans’ financial situation is reforming the business side of the tax code, so that we can give Americans access to the kind of jobs, wages, and opportunities that will set them up for a secure future.
“In order for individual Americans to thrive economically, we need American businesses to thrive.
“Thriving businesses create jobs.
“They provide opportunities.
“And they increase wages and invest in their workers.
“Right now, though, our tax code is not helping businesses thrive.
“Instead it’s strangling businesses large and small with high tax rates.
“Our nation has the highest corporate tax rate in the industrialized world – at least 10 percentage points higher than the majority of our international competitors.
“And it doesn’t take an economist to realize that high tax rates leave businesses with less money to invest in their workers.
“Less money to spend on wages.
“And less money to create new jobs.
“And this situation is compounded when you’re an American business with international competitors that are paying a lot less in taxes than you are.
“It’s no surprise that U.S. businesses struggling to stay competitive in the global economy don’t have a lot of resources to devote to creating new jobs and increasing wages.
“A study from the White House Council of Economic Advisers estimates that reducing the corporate tax rate from 35 percent to 20 percent would increase average household income by $4,000 annually.
“That’s a significant pay raise for hardworking American families.
“And another study shows a similar pay increase.
“Boston University professor and well-known public finance expert Larry Kotlikoff recently issued a study that concluded that lowering the corporate tax rate from 35 to 20 percent would increase household income by $3,500 per year on average.
“Specifically, the study concluded that ‘depending on the year considered, the new Republican tax plan raises GDP by between 3 and 5 percent and real wages by between 4 and 7 percent. This translates into roughly $3,500 annually, on average, per working American household.’
“Mr. President, on top of our high business tax rates, there’s another major problem with our tax code that’s decreasing American jobs: our outdated worldwide tax system.
“What does it mean to have a worldwide tax system?
“It means that American companies pay U.S. taxes on the profit they make here at home, as well as on part of the profit they make abroad, once they bring that money home to the United States.
“The problem with this is that most other major world economies have shifted from a worldwide tax system to a territorial tax system.
“In a territorial tax system, you pay taxes on the money you earn where you make it, and only there.
“You aren’t taxed again when you bring money back to your home country.
“Most of American companies’ foreign competitors have been operating under a territorial tax system for years, so they’re paying a lot less in taxes on the money they make abroad than American companies are.
“And that leaves American companies at a disadvantage.
“These foreign companies can underbid American companies for new business simply because they don’t have to add as much in taxes into the price of their products or services.
“And when foreign companies beat out American companies for new business, it’s not just American companies who suffer: It’s American workers.
“That’s why a key part of Republicans’ tax plan involves lowering our massive corporate tax rate and transitioning our tax system from a worldwide tax system to a territorial tax system.
“By making American businesses more competitive in the global economy, we can improve the playing field for American workers.
“57 percent of the manufacturers who took part in a recent survey from the National Association of Manufacturers reported that they would be more likely to hire additional workers if comprehensive tax reform becomes law.
“And 52 percent reported that they would be more likely to increase employee wages and benefits.
“That would be a tremendous boost for American workers.
“And comprehensive tax reform will allow us to see the same kind of results in other industries.
“Mr. President, the other part of improving the playing field for American workers is lifting the tax burdens facing small businesses.
“Small businesses are incredibly important for new job creation.
“But like bigger businesses, right now small businesses are being strangled by high tax rates, at times even exceeding those paid by some large corporations.
“That can make it difficult for small businesses to even survive, much less thrive and grow their businesses.
“Every dollar we save small businesses by lowering their tax rates is a dollar a small business owner can use to expand the business, add another worker, or give employees a raise.
“We can also help small businesses increase wages and create jobs by allowing them to recover their investments in things like inventory and machinery more quickly.
“Right now, it can take small businesses years or even decades to recover the cost of their investments in equipment and facilities.
“That can leave them extremely cash-poor in the meantime.
“And cash-poor businesses don’t expand.
“They don’t hire new workers.
“And they don’t increase wages.
“Allowing small businesses to recover their investments more quickly will mean more jobs and opportunities for American workers.
“Mr. President, the American people have had a rough few years.
“But economic stress doesn’t have to become the status quo for the long term.
“We can start turning things around right now.
“Comprehensive tax reform will put more money in Americans’ pockets.
“It will give Americans access to new jobs and more opportunities.
“And it will increase Americans’ wages.
“I look forward to passing our comprehensive tax reform bill in the near future and giving the American people the relief they’ve been waiting for.”