U.S. Sen. John Thune (R-S.D.) discussed the tax reform framework that was released this week by the Senate Finance Committee, of which Thune is a member, the House Ways and Means Committee, and the Trump administration. The framework supports Republicans’ five principles that should guide pro-growth, comprehensive tax reform, which include: providing tax relief to the middle class; increasing wages, jobs, and economic growth; keeping good-paying jobs in the Unites States; increasing American competitiveness in the global economy; and simplifying the tax code.
Thune’s remarks (as prepared for delivery):
“Mr. President, one of Senate Republicans’ most important priorities for the rest of this year is passing comprehensive tax reform.
“Because comprehensive tax reform is perhaps the single most important thing we can do to get our economy back on the path to long-term health.
“Comprehensive tax reform done right will boost jobs.
“It will increase wages.
“It will provide much-needed tax relief for middle-income taxpayers and families.
“It will help businesses reinvest in their operations, employees, and new products.
“And, most importantly, it will help us achieve strong, consistent economic growth.
“Over the past few weeks, leaders from the House, Senate, and White House have been meeting to develop the framework for the tax reform bill we’ll take up later this year.
“This morning, they unveiled that framework.
“The framework supports Republicans’ five principles for tax reform:
“Providing tax relief for the middle class.
“Increasing wages, jobs, and economic growth.
“Keeping well-paying jobs here at home.
“Increasing American competitiveness in the global economy.
“And simplifying the tax code.
“Mr. President, the framework released today emphasizes tax relief for the middle class.
“First and foremost, we are going to ensure that working families receive a much-needed increase in take-home pay.
“Right now, 50 percent of Americans consider themselves to be living paycheck to paycheck, while a third of voters say they are just $400 away from financial crisis.
“That’s not acceptable.
“Our tax reform plan will ensure that these families are no longer left behind.
“Our plan will increase the standard deduction, which will provide tax relief to those families who need it the most.
“It will also enhance the child tax credit.
“I don’t need to tell anyone that the important work of raising a family is getting more and more expensive.
“It’s time for hardworking families to get a break with a larger child tax credit.
“And finally, we’ll be lowering the rates on middle-class families.
“By collapsing the seven income-tax brackets to three, we will ensure working families get to keep more of what they earn.
“Second, our tax plan will increase wages, jobs, and economic growth by lowering tax rates and improving cost-recovery for American businesses and job creators.
“The framework released today lays out a goal of a 20-percent corporate tax rate.
“Right now, our corporate tax rate is the highest in the developed world.
“Our competitors pay an average rate of 22.5 percent, while U.S. companies face a 35-percent tax rate.
“That’s a big problem.
“Our uncompetitive tax rate has driven companies to move their headquarters and jobs overseas and led to wage stagnation and a lack of opportunity for American workers.
“Lowering the corporate rate will create jobs and increase wages for working families across the country.
“An equally important priority laid out in the framework is lower tax rates for small businesses, farms, and ranches.
“Like bigger businesses, small businesses – from partnerships to S corporations – currently face high tax rates, at times even exceeding those paid by some large corporations.
“Lowering tax rates for these businesses and creating a new maximum pass-through rate will allow a business to reinvest more of its earnings in successful operations.
“In short, it will help these job creators thrive.
“The Republican tax plan will also allow for unprecedented expensing.
“Allowing small businesses to recover their costs more quickly will free up capital and allow them to grow and create new jobs.
“Mr. President, the framework released today also shows how we are going to meet our goal of making America more competitive and keeping well-paying jobs here at home.
“A key part of keeping well-paying jobs here at home is making the United States an attractive place to do business by reforming our outdated worldwide tax system.
“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 too often 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.
“Mr. President, we’ll also simplify our tax code.
“Each year, Americans spend 2.6 billion hours complying with the individual income tax.
“Not only is this a drag on the economy, it’s an annual frustration and burden for hardworking families.
“The goal of our tax reform plan is to let American families complete their taxes on something as simple as a postcard.
“Lower rates, fewer tax brackets, and a generally simplified code will end the complicated mess too many families face every tax season.
“Mr. President, we’ll continue to develop the details of this framework in the coming weeks, as we work toward a final draft of our comprehensive tax reform bill.