U.S. Sen. John Thune (R-S.D.), a member of the tax-writing Senate Finance Committee, today discussed the status of tax reform. The Senate passed its bill on December 2, which is currently being reconciled with the House version in the House-Senate conference committee, of which Thune is a member. Thune highlighted the fundamental principles of the bill, including doubling the standard deduction, doubling the child tax credit, and lowering rates.
Thune’s remarks (as prepared for delivery):
“Mr. President, it’s a good week here in the Senate.
“We’re getting closer and closer to the finish line on tax reform.
“And that means we’re getting closer and closer to real relief for the American people.
“Our legislation is going to cut tax bills for American families.
“It’s going to increase their wages.
“And it’s going to give them access to new jobs and opportunities.
“The tax bill the Senate passed December 2 would cut income tax rates for American families starting next month.
“It would double the standard deduction.
“And it would double the child tax credit.
“That would mean a substantially lower tax bill for American families next year.
“Under our bill, a family of four making $73,000 would see a $2,200 tax cut.
“But our bill doesn’t just provide immediate relief for families.
“Our bill also sets families up for economic health for the long term by giving them access to higher wages, new jobs, and better opportunities.
“And how does it do this?
“By improving the playing field for American businesses.
“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.
“But our current tax code has not been helping businesses thrive.
“For years now, our tax laws have left businesses of all sizes struggling under the burden of high tax rates and an outdated tax system that has left American businesses at a disadvantage in the global economy.
“Small businesses employ nearly half of American workers and create a majority of the new jobs in this country.
“But right now, small businesses face high tax rates that can make it difficult for these businesses to even survive, much less thrive and expand their operations.
“Our bill fixes this.
“To start with, our bill implements a new deduction for pass-through businesses like partnerships, LLCs, and S corporations.
“This deduction would allow them to keep more of their money, which would allow them to reinvest in their operations, increase wages, and hire new workers.
“Our bill also reforms current provisions in the tax code that frequently leave small businesses with very little cash on hand.
“Under our legislation, small businesses would be able to recover the capital they’ve invested in things like inventory and machinery much more quickly – and in certain cases, immediately.
“This in turn would free up capital that small businesses could use to expand and create jobs.
“Our legislation also includes provisions I helped develop that would simplify accounting rules for small businesses, which would also help reduce their tax burden, leaving more of their earnings to reinvest in their businesses and their workers.
“Mr. President, in addition to providing relief to small businesses, another thing our bill does to boost Americans’ wages is lower our massive corporate tax rate.
“Our nation’s corporate tax rate is currently the highest in the industrialized world, which puts U.S. businesses at a major disadvantage next to their international competitors.
“Reducing the corporate tax rate would enable U.S. businesses to compete on a more level playing field, which would in turn free up money that U.S. businesses could use to create jobs and increase wages.
“The White House Council of Economic Advisers estimates that reducing the corporate tax rate to 20 percent would increase wages for U.S. households by $4,000.
“That’s money that families could use to save for retirement, help pay for a child’s education, replace an aging vehicle, or invest in their home.
“Our bill would also boost wages and increase opportunities for Americans by ending the outdated tax framework that is driving American companies to keep jobs and profits overseas.
“Our nation currently operates under a so-called worldwide tax system.
“That 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.
“Our bill replaces our outdated worldwide tax system with a territorial tax system.
“Under our legislation, American companies would no longer face the double taxation that has encouraged them to send their investments and their operations overseas.
“Instead, U.S. companies would have a strong incentive to invest their profits at home in American jobs and American workers.
“All in all, the Tax Foundation estimates that in addition to increasing wages, our bill would create nearly 1 million new jobs for American workers and boost the size of the economy by 3.7 percent.
“Mr. President, this week members of the House and Senate, myself included, are working on the final draft of comprehensive tax reform legislation.
“We hope to send a final bill to the president next week.
“I’m thankful to have been able to be part of this tax-writing effort.
“The bill we’re finalizing – which is the product of years of work by members of both parties – represents a once-in-a-generation opportunity to profoundly change the American people’s lives for the better.
“Our tax bill will provide real, immediate, direct relief to Americans now.
“And it will give Americans access to the kind of jobs, wages, and opportunities they need for a secure and prosperous future.
“After years of economic stagnation, the bill we’re drafting will usher in a new era of economic dynamism in this country.
“And it will send a message to the world that America is serious about competing and succeeding in the 21st century economy.
“Mr. President, I’m grateful to my colleagues on the House and Senate tax-writing committees for all the work they’ve done to put together this legislation.
“And I look forward to working with my colleagues on the conference committee to finish our final draft and get the bill across the finish line.”