COUNTERPOINT: What should federal tax reform look like?
A conservative view: Republicans, Democrats must come together to overhaul antiquated system
By RODNEY DAVIS
The year we last saw tax reform in this country, I had just gotten my driver’s license, was working my first job at McDonald’s, and listening to Poison’s debut album, “Look What the Cat Dragged In.” Oh, and the Chicago Bears were Super Bowl champions.
A lot has changed since 1986, including our economy and what’s needed to create jobs and economic growth. That’s why Republicans and Democrats in Congress must focus on overhauling our broken, outdated tax code.
Our complex tax code has stifled our economy, keeping us at a sub-2 percent in economic growth, and has cost Americans billions in lost income and more than 8.9 billion hours preparing their taxes each year. There has been a lot of talk in Washington over the last 31 years about reforming our broken tax code but now House Republicans have a plan that prioritizes job creation and helping middle-income Americans.
Despite being the leading job creators, American small businesses are paying tax rates of upwards of 44.6 percent. Nearly 75 percent of all small businesses operate as unincorporated pass-through entities, meaning their business income is combined with their personal. For the first time ever, our plan would separate them so small businesses pay a fairer rate that will allow them to invest more in their business and create jobs.
Additionally, we address the corporate tax rate, which is the highest in the world sitting at 35 percent. This must be addressed if we are going to remain competitive with other countries.
While our plan lowers tax rates across the board, we prioritize middle-income Americans who are too often left behind by our government.
Unlike Democrats in Springfield, I believe American workers know how to spend their money better than the government does. According to the Tax Foundation, the average middle-income family in Illinois will save $5,256 each year and an estimated 70,423 jobs will be created in Illinois because of the pro-growth reforms we make. We do this by simplifying the seven individual income tax brackets that currently exist into three brackets. By getting rid of loopholes and special interest deductions that the majority of Americans do not use, we can lower overall rates.
In addition to lowering overall rates, our plan also cuts tax rates on personal savings in half and we end the “Estate Tax” so farmers and small-business owners can pass their livelihood onto the next generation.
While we preserve deductions that help most Americans buy a house, pay for college, and give to charity, we also simplify the tax code. For example, today there are more than 12 overlapping tax benefits for education forcing families to read through more than 100 pages of tax information to get help with tuition. By simplifying, we can lower rates and make it so nine out of ten Americans will be able to file their taxes on a simple post card.
Our economy will not see the boost we want, and many hardworking Americans need, until we reform our broken tax code. I may still have Poison’s greatest hits on my playlist, but our economy has changed a lot since 1986 and our tax code needs a major overhaul. Tax reform will be complicated, but I am hopeful that Republicans and Democrats will come together to get this done for the American people.
Rodney Davis is a Republican congressman from Taylorville. He represents the 13th Congressional District, which includes parts of Metro East.
Tax credit intended to help East St. Louis
A tax credit benefiting East St. Louis was extended with legislation signed by Gov. Bruce Rauner.
The River Edge tax credit promotes economic development in five communities, including East St. Louis, the only one in Downstate. Under the program, developers receive tax credits for renovating historic structures.
Senate Majority Leader James F. Clayborne Jr., D-Belleville, co-sponsored the bipartisan legislation and represents East St. Louis.
The law extends the tax credit to the end of 2021.
The law aims to turn vacant, rundown buildings into marketable properties and has been successfully used in places like Rockford.