Bernie Marcus: “GOP should unite for legacy tax-reform vote”
“It’s time for Republican senators to put petty and political differences aside to come together over tax cuts for hardworking Americans.”
GOP should unite for legacy tax-reform vote
By Bernie Marcus
November 28, 2017
Delivering long-overdue relief from overtaxation so that small businesses can become big ones and so hardworking families can keep a little more of what they earn is a legacy for which every U.S. senator should be remembered.
Focus on the bill, not the shills. Look at how the doubling of the zero tax rate, the doubling of the child tax credit and the elimination of the 15 percent tax bracket in favor of an expanded 12 percent bracket would save middle-class taxpayers thousands of dollars a year.
And look at how the new 17.4 percent deduction for all businesses earning less than $500,000 annually, and for all nonprofessional service businesses above that threshold, will bring much needed tax relief to the overwhelming majority of the nation’s small-business job creators who have been largely passed over by the economic recovery.
Tax cuts are more than just a Christmas gift to Americans. They are the gift that keeps on giving, reverberating in so many positive ways that they’re impossible to quantify.
For some senators, a vote for the tax cut bill will be something they can take back to voters during election season, pointing out how their vote delivered their constituents the equivalent of gas money or utility bills for a year.
That’s a huge relief for the four-fifths of working Americans who live paycheck-to-paycheck, or for the half of Americans who can’t cover an unexpected $400 expense, like a medical bill or car repair.
For many senators, this will be a legacy-cementing vote for which they will be remembered and thanked long after they’re gone.
With the House tax bill passed, the real fight begins in the Senate this week. It’s time for Republican senators to put petty and political differences aside to come together over tax cuts for hardworking Americans.
The White House
Statement from the Press Secretary on the Tax Cuts and Jobs Act Passing the Senate Budget Committee
President Donald J. Trump applauds the Senate Budget Committee on taking an important step toward passing historic tax relief and reform and clearing the Tax Cuts and Jobs Act this afternoon. The momentum driving our shared priorities of job growth, economic competiveness, and fiscal responsibility through tax reform is undeniable, and this Administration is encouraged by the progress the Senate has made toward achieving these priorities. The President looks forward to providing tax cuts for hardworking Americans by the end of the year.
The White House
Investor’s Business Daily: “The Latest Tax Cut Lie: The Senate Bill Will Hurt The Poor”
“The Senate tax bill would reduce income taxes for people at every income level — even those who don’t pay taxes.”
The Latest Tax Cut Lie: The Senate Bill Will Hurt The Poor
Investor’s Business Daily
November 27, 2017
The Senate tax bill would reduce income taxes for people at every income level — even those who don’t pay taxes. That’s the official conclusion of the Joint Committee on Taxation. So why are Monday’s headlines screaming that the tax cuts would make the poor much worse off?
This conveniently fits with the Democrats’ evergreen talking point on tax cuts — that they benefit the rich at the expense of the poor. But is it true?
Not. At. All.
First of all, the CBO doesn’t describe the Senate bill as being “harsh” to the poor. That’s the spin put on by the reporter.
The report does, however, include a table that shows how the bill would affect federal revenues and spending by income group. And, indeed, it appears to indicate that those making less than $40,000 will take it on the chin, while those making more than $100,000 make out like bandits.
But note the word “spending” above. Since this is a tax-cut bill, why is “spending” part of the calculation at all?
That’s in there because the CBO includes the spending impact of the Senate bill’s repeal of ObamaCare’s individual mandate.
And this is where things get really fishy.
When Republicans demanded a distribution table that looked only the impact of the tax cuts in their tax cut bill, the result was remarkably different.
What that table…indicates is that every income group will get tax relief — including those who don’t pay taxes because of the bill’s hike in refundable tax credits.
And, by the way, none of these tables accounts for the economic boost, the new jobs and the increased income that will result from the GOP’s tax cuts.
Anyone want to claim the poor will be hurt by that?
The White House
“Sen. Rand Paul: Here’s why I plan to vote for the Senate tax bill…”
“This tax bill is a true test for my colleagues. I’m not getting everything I want — far from it. But I’ve been immersed in this process. I’ve fought for and received major changes for the better — and I plan to vote for this bill as it stands right now.”
Sen. Rand Paul: Here’s why I plan to vote for the Senate tax bill (and my colleagues should step up)
By Sen. Rand Paul
November 27, 2017
One of the fundamental problems in Washington is the attitude that the money that people make belongs to the government. That’s why you hear arguments about how much a tax cut “costs,” or big government advocates disingenuously and breathlessly complaining about the people who pay taxes getting a tax cut.
One of the main differences between Republicans and Democrats is that Republicans, in general, favor less government and more tax cuts. That’s why I’m pleased to see us moving forward on a plan for tax cuts, and why I hope to vote to pass such a cut in the coming weeks.
This tax bill is a true test for my colleagues. I’m not getting everything I want — far from it. But I’ve been immersed in this process. I’ve fought for and received major changes for the better — and I plan to vote for this bill as it stands right now.
I urge my colleagues to do the same. I urge you, their constituents, to make sure they hear from you.
The next few weeks in Washington will be important. Will we keep our word and cut taxes? Will we do what we campaigned on and repeal the ObamaCare mandate? I will fight for both, and I look forward to ending the year keeping these important promises to the American people.
Economists: “How Tax Reform Will Lift the Economy”
“In short, there is a substantial body of research suggesting that fundamental tax reform of the type being proposed would have an important effect on long-run GDP.”
How Tax Reform Will Lift the Economy
By Robert J. Barro, Et Al.
The Wall Street Journal
November 26, 2017
The present debate over tax reforms proposed by President Trump’s administration and embodied in bills that have passed the House of Representatives and the Senate Finance Committee has raised the basic question of whether the bills are “pro-growth”: Would the proposals raise current and future economic activity and generate federal tax revenue that would reduce the “static cost” of the reforms? This letter explains why we believe that the answer to these questions is “yes.”
Reducing Corporate Tax Rates, as Proposed, Will Increase Economic Activity
In short, there is a substantial body of research suggesting that fundamental tax reform of the type being proposed would have an important effect on long-run GDP. We view long-run effects of about 3% assuming five years of full expensing, and 4% assuming permanent full expensing, as reasonable estimates.
Another advantage of the corporate rate reduction embodied in the House and Senate Finance bills is that it would lead both U.S. and foreign firms to invest more in the United States. In addition, U.S. multinational firms would face a reduced incentive to shift profits abroad, which would raise federal revenue, all else equal.
Lowering Individual Tax Rates Also Offers Generally Positive Economic Effects
The House and Senate bills also contemplate a number of individual tax provisions that can affect economic activity and incomes. In recognition of the fact that non-corporate business income is substantial in the United States, both bills would reduce taxation of non-corporate business income and increase the amount of capital expensing allowed. While difficult to quantify, as the bills specify different effective tax rates, these provisions would increase investment and GDP above the level associated with the corporate tax changes discussed above. Also on the individual side, both the House and Senate bills reduce marginal tax rates on labor income for most taxpayers, increasing the reward for work. Increases in labor supply, in turn, increase taxable income and tax revenues.
Confirming a Pro-Growth Objective Is Important for the Path Forward
You have consistently stressed that the objective of tax reform should be to enhance prospects for increased economic growth and household incomes. We agree with this objective, which is consistent with the traditional norms of public finance going back to Adam Smith. We believe that the reforms embodied in the House and Senate Finance bills would achieve this objective. The increased growth, in turn, would lead to greater taxable income and federal tax revenues, which would reduce the static cost of lost federal tax revenue from the reform.
The Wall Street Journal: “Tax Reform, Growth and the Deficit”
“Republicans need to decide if they still believe America can prosper again, or if it is doomed to the slow growth and stagnant wages of the last 11 years.”
Tax Reform, Growth And The Deficit
The Wall Street Journal
November 27, 2017
Start with the fact that the GOP budget outline allows for a net tax cut of $1.5 trillion over a decade on a statically scored basis thanks to a deal brokered by Senators Pat Toomey and Bob Corker. Democrats and their media chorus are using that number to claim that reform will bust the budget and add to the federal debt. This comes with ill grace from people who cheered Barack Obama’s doubling of the national debt in eight years, but it’s also overwrought.
CBO’s estimates are inherently speculative because no one knows when the next recession might hit or what some future Congress might do. But CBO has typically underestimated the growth and revenue feedback from tax cuts. A classic example is the 2003 cut in the tax rate on capital gains. Dan Clifton of Strategas Research notes that in January 2004, eight months after the tax cut passed, CBO predicted $215 billion in capital-gains revenue through 2007. The actual figure? $377 billion. CBO underestimated economic growth and how much investors would cash in their gains.
CBO’s roughly $43 trillion revenue estimate also depends on a projection of average economic growth of 1.9% a year. But the U.S. economy has never grown that slowly for so long. CBO says that every 0.1% increase in GDP adds about $270 billion in revenue over 10 years. That means a mere four years at 3% growth—the U.S. historical norm—could fill a $1 trillion hole.
Another false charge from the left is that the GOP bills are merely a tax cut without any reform. But the bills eliminate trillions of dollars in loopholes, such as the state and local tax deduction. The House bill caps the mortgage-interest deduction at $500,000.
Also on the chopping block are business carve-outs—including cuts in the deductibility of interest—that are used to pay for lower business tax rates. We’d like to see every loophole eliminated, but this really is the most far-reaching business-tax reform since 1986.
The question Senators need to ask themselves in the end is whether this reform, all things considered, is a net benefit for the country. We think it is—not least because it is a vote of confidence that better policies can restore America’s traditional economic vigor. Democrats and their media friends have given up on that score, concluding that we are doomed to “secular stagnation” and that our politics must devolve into a brawl to divide up the spoils of whatever meager growth we can muster.
Sen. David Perdue: “The simple truth about America’s awful tax code I learned as a Fortune 500 CEO”
“Because of Congress’s failure, American consumers, companies and workers are suffering.”
The simple truth about America’s awful tax code I learned as a Fortune 500 CEO
By Sen. David Perdue
November 20, 2017
I led two Fortune 500 companies. One of them, Dollar General, today pays an effective tax rate of 37 percent. The other, Reebok, pays an effective rate of 19 percent. This is not because of loopholes exploited by these businesses. It is an amalgamation of 100 years of Washington toying with the tax code to incentivize certain industries without ever revisiting whether these incentives actually accomplished their intended goal, or were still relevant.
At the same time, our international tax structure is jeopardizing domestic growth and crushing corporations’ ability to be globally competitive. We have one of the highest corporate tax rates in the developed world and we still have a tax on repatriated earnings. Essentially, that is a double tax that has locked more than $2.6 trillion in U.S. profits overseas.
Since 2004, American companies lost more than $500 billion combined on the global acquisitions market. In fact, according to the Business Roundtable, American companies were the target for mergers and acquisitions 31 percent of the time, while they were the acquirer 16 percent of the time. If our corporate tax rate had been 20 percent, it is estimated that 3,200 companies would have stayed in America during that time.
Our workforce is unique, innovative, self-starting and — regardless of obstacles — it gets the job done. However, today’s corporate tax structure is penalizing our workers. We have to reduce the tax burden before it cripples our workforce even further.
If we change the business tax code by lowering the corporate tax rate and eliminating the repatriation tax, there will be renewed investment in our economy. This change will create jobs, increase wages, boost workforce development and grow the economy.
The United States is on the cusp of an economic turnaround. Consumer confidence is at a 16-year high and manufacturer optimism is at a 20-year high. There is an expectation being priced into the bond and stock markets that something will happen on tax this year, and it’s imperative that Congress act accordingly. Changing the tax code by Christmas is the single greatest thing we can do to ignite economic growth next year.
We need to change the tax code to grow the economy, put people back to work, increase wages, and over the long-term, help reduce the national debt. Otherwise we will continue to be outpaced by our competitors and American workers will pay the ultimate price.
Senator David Perdue is the junior Republican Senator for the state of Georgia. He is the only Fortune 500 CEO in Congress, serving as the CEO of companies like Reebok and Dollar General
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