Over the past few months, there have been many instances that have displayed the need for comprehensive tax reform in the United States. In April, Pfizer’s failed attempt at a corporate inversion illustrated how our high corporate tax rates are forcing some of our largest and successful corporations to leave the U.S. in order to find lower rates. Just this past month, the European Union presented Apple with a $14.5 billion tax bill, which serves as the perfect example of how our tax code encourages companies to keep their money abroad and how much it can backfire when they are subject to the laws and regulations outside of our borders.
While these examples show how the tax system is negatively impacting corporations, we have also seen how our tax policies are hurting small businesses and workers across the country. Job creation has slowed, productivity has rapidly declined, and the U.S. economy is stagnant, with growth barely over one percent thus far in 2016.
These are certainly troubling signs for the Unites States’ economic future, but some of our Representatives and political candidates have recognized the need for comprehensive tax reform. House Republicans have proposed a plan to simplify how we are taxed, lower rates for individuals, small businesses, and corporations to encourage growth, and fix longstanding issues like the estate tax and problems associated with corporate inversions. They have made pro-growth reform a priority as part of their “Better Way for America” platform.
Additionally, both party-nominated presidential candidates, Hillary Clinton and Donald Trump have both discussed the need for tax reform on the campaign trail. While they disagree on how to best accomplish this, they both agree on one important thing – our tax code is broken and we need to come together to perform a complete overhaul.
It seems that with all of the coverage surrounding inversions and the slow growth of the American economy, along with leaders in Washington formulating plans, all signs are pointing toward tax reform in 2017. If we cannot fix our tax code, we will continue to push companies abroad and we will not have high economic growth or create the jobs needed to fuel the economy.
Businesses of all sizes need action to be taken as soon as possible. Tax reform is a rare issue that has bipartisan support throughout the country. To address problems with the tax code, the entire process needs to be simplified, rates need to be lowered across the board to ensure every American business is able to compete at home and abroad, and it must be done in a comprehensive manner because the current method of patchwork fixes does little to promote growth or improve the situation.
There may be several indicators that tax reform will occur soon, but we need to encourage all of our Representatives to enact comprehensive tax reform in 2017.