U.S. Sen. John Thune (R-S.D.) today discussed why reforming the tax code is essential for increasing economic growth in the United States. Thune explained that by reforming our business tax code, in particular, we can boost economic growth, which would allow American businesses to thrive. It would also allow individual, hard-working Americans to thrive, reversing years of recent economic stagnation under the Obama administration.
Thune’s remarks (as prepared for delivery):
“Mr. President, we’re getting close to making tax relief for Americans a reality.
“Last week, the House released its tax reform bill, and this week, we expect the Senate Finance Committee to release our version.
“In the coming days, the tax committees in both houses will review the bills, and then we’ll debate them on the floor and develop a final version.
“Mr. President, after years of economic stagnation, Americans are ready for relief.
“They’re ready to keep more of their hard-earned money.
“They’re ready to finally see a real pay increase.
“And they’re ready for access to more economic opportunity.
“That’s what our comprehensive tax reform bill is going to provide.
“To start with, our bill is going to put more money in Americans’ pockets by lowering their tax rates and doubling the standard deduction.
“Under our bill, a family making $24,000 or less per year won’t be paying any taxes.
“And families making more than $24,000 will be paying significantly less than they’re paying today.
“We’re also going to help families by substantially increasing the child tax credit.
“And we’re 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 that’s only the beginning.
“Americans don’t just want to keep more of their hard-earned money – they also want to be making more of it.
“But Americans have had a hard time doing that lately.
“Wages have been stagnant for years, and new opportunities have been hard to find.
“And so in addition to reforming the individual side of the tax code, we’re going to reform the business side, 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 both large and small businesses with high tax rates.
“Small businesses are incredibly important for new job creation
“But the high tax rates too many small businesses currently face can make it difficult for them to even survive, much less thrive and expand their operations.
“So we’re going to lower taxes for small businesses, so that they can grow and hire new workers.
“We’re also going to allow small businesses to recover their capital invested in things like inventory and machinery more quickly, which will free up capital that they can use to expand and create jobs.
“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 needless to say, cash-poor businesses have a hard time expanding, hiring new workers, or increasing wages.
“Allowing small businesses to recover their investments more quickly will mean more jobs and opportunities for American workers.
“In addition to high tax rates on small and large businesses, another thing that’s decreasing jobs and opportunities for American workers is our outdated worldwide tax system, which is discouraging U.S. companies from investing their profits here at home in American jobs and American workers.
“Having a worldwide tax system 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 back to the United States.
“The problem with this is that American companies are already paying taxes to foreign governments on the money they make abroad.
“Then when they bring that money home, they can end up having to pay taxes again on part of those profits, and at the highest tax rate in the industrialized world.
“It’s no surprise that this discourages businesses from bringing their profits back to the United States to invest in their domestic operations, new jobs, and increased wages.
“Between 1983 and 2003 – when the U.S. tax rate was much more competitive with those of other countries – there were 29 corporate inversions where U.S. companies moved abroad.
“Between 2003 and 2014 – when other countries were dropping their corporate tax rates and shifting to territorial tax systems – there were 47 such inversions.
“Our tax plan addresses this drag on our economy by moving from our outdated worldwide tax system to a territorial tax system.
“By shifting to a territorial tax system here in the United States – a move supported by members of both parties – we will eliminate the double taxation that encourages companies to send their investments and their operations overseas.
“Combine that with a reduction in our high corporate tax rate, and we can provide a strong incentive for U.S. companies to invest their profits at home in American jobs and American workers instead of abroad.
“Business tax reform is essential to reversing the economic stagnation of recent years.
“The White House Council of Economic Advisers estimates that the tax reform framework Republicans have presented will boost economic growth by between 3 and 5 percent.
“That’s good news for the economy.
“More specifically, however, it’s good news for American workers, who can expect to see their incomes rise as a result.
“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.
“And Boston University professor and public finance expert Larry Kotlikoff found that lowering the corporate tax rate to 20 percent would increase household income by $3,500 per year on average.
“This was most recently confirmed by Martin Feldstein, a Harvard professor and former chair of the Council of Economic Advisers, who noted in the Wall Street Journal this week that corporate tax reform is likely to boost household income by $3,500 per year.
“Mr. President, it’s been a rough few years for the American economy and American workers.
“But with comprehensive tax reform, the next few years – and decades – can look very different.
“Republicans’ tax reform legislation is going to provide direct relief to hardworking Americans.
“And it’s going to create the kind of economy that will give workers access to more jobs, better opportunities, and higher wages for the long term.
“I look forward to working with my colleagues on the Senate Finance Committee, under the leadership of Chairman Hatch, to put the final touches on our bill and take it up in the committee next week.
“It’s time to give the American people some relief.”