WASHINGTON – While President Trump’s newly announced tax-reform framework has been condemned by some as a plan that will primarily benefit wealthy Americans, the chairman of the House tax-writing committee promises the tax-code overhaul will strengthen America’s middle class and give families a key advantage.
This week, headlines blared warnings such as USA Today‘s: “Trump’s tax plan could actually benefit wealthy people like him.”
And House Minority Leader Rep. Nancy Pelosi, D-Calif., blasted the proposal as a “billionaires-first tax plan.”
The New York Times chimed in: “Trump tax plan benefits wealthy, including Trump.”
Politico piled on: “Trump defies GOP over tax cuts for the rich.”
In reality, contends, Rep. Kevin Brady, R-Texas, the framework proposed by President Trump and the GOP-led House and Senate is comprised of “strong conservative principles” that will benefit the middle class and “unleash economic growth.”
Brady spoke Thursday at the Heritage Foundation in Washington.
“This is a very exciting week for tax reform – it’s an exciting week to be a conservative,” he said. “Yesterday, with the release of our unified framework, we took a big step in making tax reform a reality for the American people.”
Brady, the House’s top tax writer, who served as a local Chamber of Commerce official for 18 years, outlined three key objectives of Trump’s proposed tax overhaul: job creation, increased incomes, elimination of the estate tax and establishment of a fair tax.
Lowering tax rates for businesses will foster job creation, Brady said.
“First, more jobs. Under our unified framework, this begins by offering the lowest tax rates in modern history for American businesses of all size and all structures. We also lower rates for families, and we flatten out the code from seven brackets to three,” he explained. “Rates for individual families will all go down, 12 percent, 25 percent and 35 percent. And like President Reagan did, we take the lowest rate, 10 percent, and turn it into zero.
“The reason we do this is simple: Every dollar of income American families and businesses can keep and put toward their American dream is a dollar that grows our economy, creates jobs and expands opportunity.”
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The dramatic deduction of the corporate tax rate, Brady argued, will incentivize job creators to expand in the U.S. rather than taking their businesses abroad.
“On the business side, our job creators and workers will no longer have to bear America’s 35 percent corporate tax rate – the highest in the developed world,” he said. “Instead, we are reducing it to 20 percent, which is the lowest in American history and beats many of our world competitors.”
The Texas congressman said America’s small-business owners have for years been “having to compete with one hand tied behind their back” and, under the new plan, will finally have a more level playing field where they can “succeed and grow and win.”
“For America’s small businesses – our Main Street job creators – we’re delivering a tax rate of no more than 25 percent. This means, our Main Street job creators will no longer be taxed at the individual rates above 40 percent,” he explained. “These historically low rates translate into more job opportunities for middle-income Americans.”
Americans, particularly families, will come home with bigger paychecks and keep more of what they earn under Trump’s revamped tax code, Brady said.
“Our tax code helps grow your paychecks and standard of living along with it,” he explained. “We’re delivering lower rates for American families so they can keep more of the income [they] earn – the income [they] save, the income [they] spend, and the income that [they] invest.”
American business owners will benefit from writing off purchases of new equipment, Brady added.
“To truly unlock the growth of paychecks nationwide, we also have to unleash businesses investment in the United States – that’s why, for the very first time, we’re offering our businesses the ability to fully write-off their purchases of new equipment they need to produce and compete at a higher level in year one,” he said. “We’re not just making it easier, more affordable, for businesses to invest in physical capital – new equipment, software and technology – we’re making it easier for them to invest in human capital. We’re unleashing investments in you, the American worker.”
Brady continued: “Expensing drives productivity – imagine the tax rates for a business to invest in their workers and in their success when expensing is a zero percent tax rate. This bold reform helps provide Americans with new tools they can use to do their jobs better and more effectively. Greater productivity helps our businesses grow, serves our customers and creates jobs. Just as important, [it] helps you earn a larger paycheck.”
The third “most personal” and “most important goal we have” is a fair tax, Brady explained.
“We’re eliminating the current maze of special-interest loopholes that benefit special interests but offer nothing but confusion for working families,” he said. “We double the standard deduction – protect more of the first income you earn from taxes and spare the vast majority of Americans the hassle of itemizing.
“We preserve family focused provisions that help middle-class Americans with buying a home, raising children, paying for college and donating to your local church charity or cause you believe in.”
The GOP’s proposed plan will dramatically simplify filing taxes as well, he said.
“We’re repealing the alternative minimum tax, so millions of families no longer have to spend time and money calculating their taxes twice each year,” Brady said. “Ultimately, this delivers a tax code so fair and so straightforward that nine out of 10 Americans will be able to file [their] taxes on a form as simple as a postcard. Or even as easy as ordering a pizza on your smartphone. Imagine that.”
And for Americans with estates worth more than $5.45 million, they will have “real peace of mind” after the estate tax is eliminated, Brady said.
“We are dedicated and determined to repeal the death tax,” he said. “For the first time in over 100 years, owners of family farms and the owners of family owned businesses won’t have to fear double, or even triple, taxation when they pass down their life’s work to their kids or their grandkids. Their families can keep building that business, creating more jobs and growing paychecks for families across the country.
Fortifying America’s competitiveness around the world is a top priority, which can only be accomplished if the American people are economically prosperous, Brady said
“We have to remember one very important thing: Our economy can’t reach its full potential until the hard-working people of this country have an opportunity to reach theirs,” he said. “At the same time, our nation can’t be more competitive globally unless our local businesses and workers have an opportunity to compete anywhere in the world, especially here at home.
“If we want to unleash the vast potential of this nation through tax reform, we have to start by unleashing the individual potential of every American – by giving you the chance to put your talents into action, giving you the chance to build a better life for yourself and your family. Pursue your own American dream, whatever that might be, and make it a reality. That’s at the heart of our tax reform. That’s exactly what our bold unified approach is focused on.”