Tipton: State House working on tax code that works for Coloradans (column)
Editor’s note: Find a cited version of this column at http://www.vaildaily.com.
Every year, in preparation for tax day, Americans spend 6 billion hours trying to navigate the internal revenue code and federal tax regulations (now up to 10 million words). The compliance bill has now reached $409 billion. The last time Americans experienced major tax reform was in 1986, under President Ronald Reagan. In the past few decades, the tax code has grown to a size that is unmanageable and overly complicated. In the House, we’re working to deliver a tax-reform plan that will deliver relief and results for all Americans.
Our goals are to simplify the tax code, so the average family can complete their taxes on a form the size of a postcard and keep more of the money they earn; create a separate, low tax rate of 25 percent for small businesses; bring the U.S. corporate tax rate more in line with the corporate tax rates of other developed nations; and restructure the IRS around three units focused on services to individuals and families, businesses and an independent small-claims court.
To simplify the tax code for families, our plan envisions lowering tax rates across the board and reducing the number of tax brackets from seven to three. The plan also envisions consolidating the current tax deductions and credits for families into two simpler benefits — a larger standard deduction and a greater child and dependent tax credit. These changes, combined with the simplification of tax benefits for higher education, charitable giving and savings, will allow Americans to complete their taxes on a form the size of a postcard.
I know very well the headaches that small-business owners and entrepreneurs experience when it’s time to pay taxes. Under the current tax system, a successful small business could be taxed as high as 44.6 percent. On top of this, small businesses are also taxed on the money they reinvest in the business to expand and create more jobs.
Our tax-reform plan proposes to do away with the current tax on business investments and cap the small-business tax rate at 25 percent. When small-business owners and entrepreneurs get to keep more of their profits, they are more likely to make the investments they need to expand or keep their doors open. Small businesses support 49 percent of Colorado’s workforce, so reforms that support the small-business community are essential for our state.
Today, the corporate tax rate is set at 35 percent, while the average corporate tax rate in other developed countries is 24.8 percent. Our tax structure is slowing economic growth and creating a disincentive for doing business in the United States. U.S. businesses are outsourcing labor to countries with lower tax rates or passing on expenses to consumers, neither of which are good for Coloradans. The House tax-reform plan would reverse these trends and put U.S. businesses on an even playing field with businesses around the globe by setting the corporate tax rate at 20 percent.
According to the Tax Foundation, when all of the reforms discussed above and our complete tax reform plan are implemented, Colorado’s median-income households will gain more than $7,500 and our state will see more than 30,000 new jobs created.
There are still ongoing discussions among members of Congress and officials in the administration about the final version of our tax-reform plan, but I am confident that we will be able to deliver much needed-relief to Colorado’s taxpayers, support Colorado’s small businesses and ensure the United States is viewed as the best place in the world to do business.
If you have any questions about our tax-reform plan, then please do not hesitate to contact my office at 202-225-4761, or write to me via http://www.tipton.house.gov.
U.S. Rep Scott R. Tipton represents Colorado’s 3rd Congressional District.
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