ATR president Grover Norquist today submitted comments to Senate Finance Chairman Orrin Hatch (R-Utah) in response to the Committee’s June 16 request for feedback on tax reform.
Pro-growth tax reform has not been signed into law since 1986. Today, the code is outdated, complex, and burdensome. U.S. tax policy is also restricting economic growth and impeding the ability of American businesses to compete internationally.
The tax code is more than 75,000 pages long, and has almost tripled in size in the past three decades. Americans spend more than 8.9 billion hours and $400 billion complying with the code every year. This complexity makes it difficult, if not impossible, for Americans to file their taxes by themselves.
In addition, the code suppresses the economy by restricting the growth of new jobs, increasing the cost of capital, and discouraging innovation.
Over the past decade, the economy has struggled at just two percent GDP growth as the country has experienced the worst recovery in the modern era. The Congressional Budget Office projects that under current policies, two percent growth will continue into the next decade.
The outdated tax code also places American businesses at a disadvantage relative to foreign competitors. According to one study, the U.S. business climate is so uncompetitive that American companies have suffered a net loss of almost $200 billion in assets over the last decade.
Foreign companies are able to expand at a far greater pace, largely because they are based in countries with tax codes that are more favorable to investment and innovation. If the corporate rate was just ten points lower, U.S. companies would have instead experienced a net gain of $600 billion in assets over the same period.
Tax reform is an opportunity to address all of these problems, and reach economic growth of at least three percent. Reforms that should be implemented include:
- A 15 percent tax rates for all businesses.
- Tax cuts and simplification for families.
- Moving to a territorial tax system for individuals and businesses.
- Implementing full business expensing.
- Repeal of the death tax and gift tax.
- Lower capital gains taxes.
- Expanding tax-preferred savings accounts.