House Ways and Means Committee Chairman Dave Camp, R-Mich., recently jump-started the tax reform debate. It’s about time. The tax code stables in Washington haven’t been cleaned out since 1986 — more than a quarter century ago, when Ronald Reagan was president.
Since then, year after year, the tax code gets engrafted with more special-interest loopholes, credits and carve-outs. Not only is this unfair to those without lobbyists, it makes the tax code mindlessly complex — a job-security program for tax lawyers and accountants.
Worse yet, back in the 1980s, the United States had among the lowest income tax rates on businesses in the world. Today, our small and large businesses pay among the highest rates.
Our corporate tax rate is now the highest in the industrialized world at 35 percent. Almost all other nations have slashed their business taxes to attract jobs and businesses. This high corporate rate in practice acts as a tariff on the goods and services we produce in the United States. Our analysts at The Heritage Foundation found that this lowers wages of American workers. Want to give U.S. workers a raise? Cut the tax rates on businesses so they invest more here.
Rep. Camp aims to fix all of this by rewriting the tax code, and that starts with lowering tax rates across the board and eliminating loopholes.
He would shrink the current seven income tax brackets down to three: 10 percent, 25 percent, and 35 percent for those families with incomes above $450,000. That highest rate of 35 percent is still too high and an unnecessary nod to the class warriors on the left, but it would be an improvement on the current rate of more than 40 percent.
The corporate tax rate would fall from 35 percent to 25 percent, which is at least closer to the world average. Camp would also allow companies to bring capital stored abroad back into America at a low tax rate of less than 10 percent, which will mean more investment and insourcing of jobs on these shores — as well as more revenue for the Treasury.