The collapse of the healthcare bill was bad for Republicans and the country. Many pundits claim that the demise of the healthcare bill will imperil the rest of the Republicans agenda. That is a simplistic and an incorrect assumption. Tax reform could and should move forward immediately, and the failure of healthcare shouldn’t prevent the possibility of tax reform.
There are many reasons why the American Health Care Act failed to even be put up for a vote, and there are many places to lay blame. However, that shouldn’t translate into complete paralysis on all things related to policy. In fact, it should mean that Congress must work harder to achieve big things like tax reform. The incentive and pressure are now even bigger to get tax reform done because of the inaction on healthcare. The country is tired of excuses, and they want Washington to work together to solve big problems. Tax reform provides the perfect opportunity to get something big done.
Comprehensive tax reform is over due. The last the time the U.S. has comprehensive tax reform was 1986, more than 30 years ago. Reforming the tax code has bi-partisan support across the country. Reforming the individual and corporate tax code is a necessity and people understand that. Given all of that, there’s a perfect storm to do comprehensive tax reform and do it now.
There is no denying that April 15th is one of the most stressful times of year for Americans because the tax code is long and complicated. The tax code contains 2.4 million words. To put that in perspective, the novel War and Peace has 580,000 words. Most Americans haven’t read War and Peace. And, chances are that even fewer have read the tax code.
The National Taxpayers Union published a study estimating that “the value of the time (6.1 billion hours) plus out-of-pocket costs expended annually on complying with the individual and corporate Tax Code amounts to an economic loss of $234.4 billion.” Those numbers are alarming and should provide Congress with all the bi-partisan incentive they need to get legislation completed.
Individual taxpayers are not the only ones feeling the pain of a broken tax code. Large and small businesses face the burden of a 40 percent corporate tax rate, the highest corporate tax rate in the developed world. The 40 percent rate is much higher than the global average of 23 percent and is chasing away jobs and investment from the United States, as corporate inversions increase as companies look to shift the burden of taxes to friendlier tax climates like Ireland or Canada. The high corporate tax rate also makes it less likely for companies to grow and hire more people. An inflated corporate tax hinders investment and growth, which means companies are less likely to expand their business interests in the United States
Every year, the Taxpayers Protection Alliance asks taxpayers from across the country whether or not they like preparing their tax return and what they want. The message is clear: Americans (despite political affiliation) want real and comprehensive tax reform.
Passing comprehensive tax reform won’t be easy. There are some potential problems like the Border Adjustment Tax (click here for previous work on the issue) that could be speed bumps. But the failure of the healthcare bill doesn’t mean that tax reform can’t happen. In fact, with the recent failure of Congress to act on healthcare, it’s now a prime opportunity for Congress to get to work on tax reform.
David Williams is the President of the Taxpayers Protection Alliance.
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