Why we need a fairer, simpler and more efficient tax code
The year was 1986. Millions of Americans were tuning in every week to watch Family Ties and Cheers on TV. Filling up your car would set you back 81 cents a gallon.
Here in the Keystone state, both the Pirates and the Steelers had seasons to forget and incumbent U.S. Senator Arlen Specter easily won reelection to a second term.
Incredibly, despite all that’s happened since the mid-1980s, 1986 was also the last time we overhauled our tax laws.
Since then, the tax code has grown thousands upon thousands of pages, and now totals 4 million words.
Not surprisingly, this behemoth is costing taxpayers $195 billion in compliance costs each year. In fact, about the only winners during the three decades since any meaningful tax reform was signed into law are the well-paid accountants and lawyers who are hired every year to help navigate this maze of rules and regulations.
There are literally billions in subsidies, special deductions and other loopholes that lobbyists have managed to secure for their powerful clients.
This arrangement is incredibly unfair.
But it’s not just the complexity and the unfairness of the tax code that’s problematic.
The United States also has the highest corporate tax rate among industrialized countries, at 35 percent.
It’s higher than France, Germany, Australia, and neighboring Mexico.
In fact, the average corporate tax rate across all 188 countries is 22.5 percent. Our high corporate rate immediately places us at a disadvantage and means businesses will think twice about setting up shop here in the United States, resulting in fewer jobs and less economic opportunity for Americans.
Corporations are not the only ones paying a lot in taxes.
Pennsylvanians are also sending a big check to the IRS every year.
According to the federal government’s own calculations, nearly 20 percent of our state’s GDP is sent to Uncle Sam to cover our tax burden.
This results in less money in the pockets of Pennsylvania taxpayers and less money for Keystone state entrepreneurs to invest and grow our economy.
It shouldn’t be this way.
Thankfully, there is real momentum to finally do something about our broken tax code.
But to pull off what has eluded lawmakers for more than 30 years, the American people will need principled lawmakers to fight unequivocally for a fairer, simpler and more efficient tax code.
Lawmakers will also need to defy the will of well-financed and well-organized special interest groups that will stop at nothing to defend the status quo.
At a time when politicians agree on little, reforming our tax code should bring together policymakers from both sides of the aisle.
There’s some evidence that this is possible.
Republican Sen. Pat Toomey has a long record championing lower taxes, and Democratic Sen. Bob Casey said in a press release shortly after being appointed to the influential Finance Committee a couple of years ago that “this Congress has a unique opportunity to reform our tax code so it works better for businesses and middle-class families.
I look forward to working to move forward tax reform in a bipartisan way.”
The time has come to put these words into action.
The Trump administration and this Congress have a once-in-a-generation opportunity to help restore Americans’ faith in the system by simplifying our tax code while modernizing it to reflect the dynamics of a 21st century economy.
The 1980s called.
They want their tax code back.
Mumford is the Pennsylvania state director for Americans for Prosperity.