Federal tax reform: The time is now
With government growing at a feverish pace and the tax code getting more complex, I would expect the folks in Washington to take a serious look at tax reform. Luckily, Sens. Marco Rubio, Florida Republican, and Mike Lee, Utah Republican, have put forth a plan that will start the much-needed conversation on this topic.
The president has failed to lead on tax reform – and many other things for that matter. That is why it is up to congressional leaders to have a discussion with the American public about how to best move forward.
Under the current system, the rates are too high, the brackets are too numerous and the loopholes are too unfair. Big businesses and wealthy individuals can afford high-priced accountants to navigate the tax code, while small local companies and middle class families get stuck with an ever-increasing bill.
Under the Rubio-Lee plan, the brackets would be reduced to two, 15 percent and 35 percent. The corporate rate would be capped at 25 percent. Most itemized deductions would be eliminated, along with most business tax credits and the estate tax.
According to the non-partisan Tax Foundation, the plan would initially lead to a drop in revenue for the federal government. However, taxpayers would have more of their own money to spend, which in the long run would lead to faster economic growth.
Over 10 years, it would grow the economy by an additional 15 percent. Wages would rise by 12.5 percent and the level of employment would increase by 2.7 million jobs.
This would obviously be welcome news for every taxpayer. Is the Rubio-Lee plan perfect? Probably not. However, it is a major step forward. It would be much better than the current system and can be the first draft of what is hopefully a comprehensive tax reform package.
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