Editor’s Note: Rand Paul is a US senator from Kentucky. He serves on the Senate Committee on Foreign Relations and the Homeland Security and Governmental Affairs Committee. The views expressed in this commentary are his own.
Rand Paul: We can be bold yet simple on tax reform
He says we can cut taxes and promote growth without picking winners and losers
As Congress returns next week, attention will turn to matters of budget, spending and taxes. The tax reform package that legislators will take up will have major implications for years to come, and we should get it right.
Unlike health care, tax reform can be simple, but I’m afraid those who are in charge will make it unnecessarily complicated, especially when coupled with an alarming timidity that could render the reform’s impact nearly meaningless.
There is much talk from the wonks in Washington about the need to make tax cuts “revenue neutral,” or offset elsewhere in the tax code. Let me tell you what that really means, and why it is a terrible idea, especially here in the “Swamp.”
Revenue neutral ultimately means that someone pays more for someone else to pay less. It means tax “reform” without real tax cuts.
Let me ask you a serious question. If someone has to pay more for someone else to pay less – which category do you think you and other Americans might fall into? I fear that tax reform that mandates revenue neutrality will result in those with the best lobbyists, lawyers and accountants being the winners, while most everyone else either gets nothing or largely loses out.
It doesn’t have to be that way. We can be bold yet simple. We can cut taxes, and promote jobs and growth, without picking winners and losers.
To get this done, our tax reform needs to have three main areas of focus.
First, every American who pays taxes should get a tax cut. Every rate should be lowered by a percentage. What percentage? That’s where we conservatives can negotiate with fence-sitters if necessary. I’d favor a large cut of at least 15% for every taxpayer. But the main and important thing is that everyone gets a tax cut.
Next, we need to simply slash the corporate tax rate to 15%, and not worry about any complicated reform that no one will agree on, or that takes 500 pages to explain.
Cut the rate so it is competitive with other countries. (15% makes us even with Canada’s federal rate.) Cut the rate so that it can create jobs. Cut the rate to encourage people to start new businesses, hire more people and grow. According to a 2016 Tax Foundation analysis of then-candidate Donald Trump’s tax plan, comprehensive reform, including lowering the corporate rate to 15%, could create around 2 million new jobs.
Finally, let’s stop the double taxation and international money hoarding of our biggest companies. There is more than $2 trillion parked overseas by companies such as Apple, Google and others. Why? Because they already paid taxes on it over there, and we want them to pay 35% to bring it back. They’re never going to do it. That’s a fantasy.
Let’s cut the rate to 5%, make it voluntary and get that money home to create more jobs. A 5% voluntary rate still brings in billions of additional revenue, which could be targeted to building and repairing infrastructure.
Three simple items. Every Republican and even some Democrats agree with the basic premise of this plan, and we can get down to arguing about the exact numbers.
We can do this, but not if we operate the way the Swamp normally does. Secret meetings. Leaders writing complicated bills no one sees. Lobbyists getting their pet provisions in bills.
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If tax reform is run like most things around here – like Obamacare repeal, for example – then I can’t predict what will happen other than it will be complicated, won’t help much and could even fail. There’s no excuse for that.
I urge President Trump and his advisers to heed this warning. Do not let what happened during the last battle up here happen again. You’ll get the same results, and no one should want that.
Lead with boldness and vision. Lead with simple ideas. And make sure your simple ideas don’t get hijacked by others’ agendas. I’m right here, ready to fight.