Why Tax Reform is Necessary

By Senator Tim Scott

When your tax code is 10 times longer than the Bible, you have a problem. Our current tax code is simply not benefiting American families – as I’ve said for far too long, Washington does not have an income problem, it has a spending problem.

Due to our overly complicated and antiquated tax code, there are Americans who have not seen a raise in decades. We can and must do better. We need to tackle tax reform head-on to create a tax code tailored for the 21st century. That means lowering taxes for middle and lower income Americans and coming up with innovative ways to re-energize struggling communities.

With over 50 million Americans living in poverty, and 7.1 million Americans unemployed, we must take positive and realistic steps to help American families flourish in today’s economy and improve their quality of life.
We can also simplify the personal tax code so that families across the country have certainty each year as they plan their finances and their future. For example, the IRS’ official instructions for the 1040 tax form are 106 pages long. When reporting your income properly requires more than 100 pages of instructions, families and business owners end up wasting millions of hours filling out forms – time that could be spent with their kids or planning to grow their business.

I’m a former small business owner, and I understand that our overly complicated tax code does very little to encourage growth. How can we create jobs for people in our communities and provide opportunity to other folks?

For those who are trying to make their way out of poverty, our system actually punishes them for success. That should not be the case. One way we can protect you, the taxpayer, from experiencing that burden is with the Investing in Opportunity Act, a bipartisan piece of legislation I introduced with Senator Cory Booker (D-NJ), Rep, Ron Kind (D-WI), and Rep. Pat Tiberi (R-OH) as original cosponsors.

My Investing in Opportunity Act, which would incentivize long-term investment in distressed communities, will unlock new private investment for communities where millions of Americans face the crisis of closing businesses, lack of access to capital, and declining entrepreneurship. With this bill, we will dramatically expand the resources to restore economic opportunity, job growth, and prosperity for those who need it most.

Commonsense business tax reform is certainly also a key component. The U.S. has one of the world’s highest corporate tax rates at 35 percent. This drastically affects employees because it reduces wages and limits companies’ ability to grow. The American Enterprise Institute (AEI) conducted a study that showed a 1 percent increase in the corporate tax rate is associated with a 0.5 percent decrease in real wages. As we consider tax reform, it is imperative that we consider the burden placed on all Americans.

Additionally, it’s no secret that the federal government’s Achilles heel is its inability to control its spending habit. This bad habit hampers our country’s most vulnerable citizens and is certainly leading us to an economic crisis. We have a huge, and very important, opportunity to economically move this nation forward with tax reform.

As a member of the Senate Finance Committee, I look forward to continuing the conversation around tax reform and working with my colleagues in both chambers to get a pro-job, pro-growth, pro-families package across the finish line. Once we make it across that line, we are destined to achieve lower taxes and higher incomes, create more jobs, and witness a significant boost in our nation’s economy. With this type of success, you can keep your money, and our children will have a bridge to a brighter future.

Tim Scott is a United States Senator from South Carolina. Scott serves on the Senate Finance Committee.

Author: Duane Childers

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