We are now passed the 100 day mark of the Trump Administration and Republican-controlled Congress. It is important that we remind our elected officials why they earned our votes back in November. For many, that reason was simple. President Trump vowed to bring an “America first” agenda to bring jobs back to the states, partially via a new tax code that closes loopholes that disadvantage small businesses, simplifies the tax code, and sets a competitive corporate tax rate.
It is not fair to say that no reform has been discussed. Currently, the most prominent tax reform plan comes from the House Republicans. Their “Better Way” tax reform blueprint, which is being championed by Speaker of the House Paul Ryan and Ways and Means Committee Chairman Kevin Brady, is a good start towards fulfilling Republicans’ campaign promises. If passed and signed into law, this plan would significantly reduce the cost of capital and reduce the marginal tax rate on labor, incentivizing work and investment to increase economic growth. It is estimated that here in California, this plan would mean 191,767 more full-time jobs.
The current corporate tax rate is 35 percent, which means the U.S. has the dubious distinction of having the highest business tax rate in the Organization for Economic Cooperation and Development (OECD). The “Better Way” plan proposes lowering the corporate tax rate from 35 percent to 20 percent, which would help U.S. businesses compete globally, stimulating economic growth and job creation. Regardless of what the final tax reform plan is called, lowering the rate to a more competitive level is essential to returning our economy to robust growth.
As someone who works in the housing industry, I know the struggles that Californians are facing to get into the competitive housing market. Tax incentives for home ownership provide assistance once tax season rolls around. The mortgage interest deduction is one critical component that help ease the financial burden of owning a home. Our legislators must overhaul our tax code so that our home owners no longer have to throw money at complying with a 75,000 page tax code that has not been modernized to fit today’s economy. Luckily for them, the GOP blueprint looks to shrike the tax filing form to the size of a post card.
At the same time, the overly long and complex tax code unfairly picks winners and losers in the marketplace. The winners are special interest groups and large corporations taking advantage of loopholes at the expense of the economy at large. Homeownership should be prioritized in order to protect home values, support investment and spur investment from new buyers; otherwise we will all end up the losers. While doing this reform we need to ask a basic question: Do we want a nation of homeowners or renters?
Done right, tax reform could add a significant number of good jobs to the economy—but only if our leaders in Washington, D.C., do their job first. As the mid-term elections near and the 100-day marker gets further in the rearview, it is important that President Trump and the Republican-controlled Congress get a tax bill passed. If they don’t do so before they ask for our votes again, the outcome of the next election could be very different from the outcome of the last.
Tim Shaw is the La Habra Mayor Pro-Tem and a candidate for Orange County Supervisor.