Americans Deserve A Fair And Competitive Tax Code

While an irresponsible and unrestrained explosion in federal spending is the primary cause of our record deficit and debt, an essential part of digging our nation out of our economic struggles is reforming our tax code so that it encourages, not discourages, job creation and economic growth. New, lasting jobs come from turning creative ideas into successful businesses. To enable those ideas to grow into jobs, we must remove barriers to productivity, including overly-burdensome and complicated tax provisions. I do not support every tax reform proposal in the President's National Commission on Fiscal Responsibility and Reform's plan, including taxing capital gains and dividends at ordinary income rates, increasing the federal gas tax and mortgage interest deduction changes. However, the recommendations provide an important starting point for simplifying the tax code, dramatically reducing compliance costs, growing our economy and driving job growth.

The current individual income tax structure creates unnecessary confusion and requires simplification. Estimates indicate the average American spends $10 to $15 in compliance costs for every $100 paid in taxes. The commission's plan included progressive recommendations to reduce individual income tax rates to as low as 8, 14 and 23 percent and sustain simpler, more targeted provisions to promote work, home ownership, health care, charity and savings. Such efforts would enable Americans to see more money in their pockets as a result of lower compliance costs, more job opportunities, higher incomes and greater returns on investment.

Additionally, our nation's high corporate income tax rates and unique taxation of foreign-source income inhibits America's competitiveness. The commission's proposals to lower the corporate tax rate, which is now the second highest in the industrialized world, and join our international competitors in a territorial system will make the American economy far more competitive. This would lead to substantial economic growth and job creation.

Reducing rates on capital gains and dividends would also have tremendous pro-growth effects and generate significantly more revenue. I continue to support efforts to permanently lower capital gains and dividend rates and oppose taxing capital gains and dividends at ordinary income rates. Raising tax rates on savings and investment would seriously hamper the investment and capital formation necessary to achieve growth in the private sector.

For far too long, Congress has offset additional spending, not with proportionate spending cuts, but with tax increases. Such practices increase the size of government and Americans' tax burden. At my insistence, a mechanism was included in the commission's report to put an end to that practice by guaranteeing that, should the dynamic effects of tax reform generate revenues above initial predictions, then every dollar of revenue above that cap must be dedicated to further tax rate reductions, to benefit the current generation, or for debt reduction, to ensure lower tax rates for future generations.

Tax reform efforts that help balance the budget, not by raising taxes, but by cutting tax rates, simplifying the tax code, broadening the base and making our tax code more competitive are constructive toward ensuring our nation is the preeminent place to establish businesses and jobs. Our nation's economic picture is worsening daily, as reinforced by the announcement that we are facing a $414 billion higher than expected federal deficit. We must get started quickly in reforming the tax code to spur lasting job growth that generates more revenue for reducing the debt, while lowering the tax burden on American families and businesses.

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