I trust that this will find you well and enjoying life.
Taxes are one of the ways out of this mess we’re in with this twenty trillion of national debt and we’re in a big mess. Reforming taxes that is, not raising them. It seems simple to me. If you have debt the way to pay it off is to create more revenue. Simplifying our tax code to increase productivity and prosperity for hard working Americans is a start. And making America a more appealing place for corporations to want to headquarter and want to do business, is certainly a way to generate more revenue. I mean think about it all things being equal, if given a choice would you rather have your company headquartered and live in Edinburgh or San Diego, Dublin or Denver?
The House of Representatives GOP has a solid, comprehensive approach to major tax reform. A letter to the editor of the Wall Street Journal on 6/24/16 from Representative Kevin Brady (Texas), chairman of the House Means and Ways Committee outlines their plan. Reference it yourself in entirety under “Opinion” on page A11. Here are major points.
“Long awaited relief to Americans from the recurring nightmare of tax season. By lowering rates, increasing the standard deduction, streamlining seven tax brackets into three and eliminating a host of special interest provisions, we simplify the tax code dramatically. By providing incentives for savings and investment, it fosters economic growth and job creation while ensuring that we spend less time and money filing taxes. Most Americans would be able to file their taxes on a form the size of a postcard.”
“Regarding small business and the many millions they employ, for the first time small business will no longer be taxed under the individual side of the code. Instead they’ll benefit from a critical distinction between wage and business income. This allows for a lower tax rate for small businesses of 25%, the lowest tax rate on pass through income since World War II.”
“Job creators of all sizes will also be able to take advantage of full and immediate expensing on investments in new equipment and technology, another historic first. This zero tax rate on new business investment is a vast departure from today’s complex depreciation rules, which direct businesses to write off purchases over long and often arbitrary periods of time. Full and immediate expensing is widely recognized as one of the most pro growth tax policies around.”
“To help American business compete and succeed in the ever-changing global tax environment, the Republican plan starts by cutting America’s 35% corporate income tax rate – the highest in the industrialized world- to a flat 20%. This is the largest corporate tax reduction in US tax history and achieved by eliminating dozens of crony tax carve outs.”
“Next the plan dramatically levels the playing field for America’s business by bringing the US tax system more in line with those of our international competitors. In a change designed to strengthen our global competiveness, American job creators will no longer be taxed abroad and at home on the same dollar of income. There will be zero rates on dividends brought home to America. Additionally the new tax system encourages American companies to bring home trillions of dollars of income that is currently “stranded “abroad – money that can be invested to create new jobs, increase wages and grow business.”
“And because “Made in America products and services currently face a price disadvantage both at home and abroad, American exports will no longer be taxed and imports will no longer be subsidized. Competition will occur on price quality and service – rather than tax regimes.”
“Finally a simpler, fairer tax code demands a simpler fairer tax collector. The current IRS will not exist but will be redesigned into three distinct service units. One with expertise on business tax, another focused on service to families. A third independent unit will be geared toward helping Americans quickly resolve tax challenges – in effect a small claims court to reduce the time and cost of resolving minor tax issues.”
Twenty trillion dollars and growing of national debt is an overwhelming number that is going to take some creative action to resolve. Reforming the tax code and making America more corporate friendly is certainly a fresh approach. Why not make America into a corporate tax haven? As I said earlier would you rather live in and headquarter your corporation in America with all of its forms of freedom and opportunities, or someplace else in the world? Reforming the tax code and making America great for individuals and corporations is a way out of this mess. Like my Daddy used to tell me when I was a kid, do something even if it’s wrong! He was quite a motivator.
If we can help in any way with this or anything else related to retirement don’t hesitate to contact us.
Best regards.
Jeff Christian CFP, CRPC