We are two months into the total Republican government of President Donald Trump and the GOP House and Senate, yet little legislative progress has been made. Competing interest groups are attempting to steer their preferred versions of GOP reform, and the result has been a stalemate. Nowhere, save healthcare reform, has this been more evident than in the area of tax policy. Every industry has its preference on how tax reform should be accomplished, based on its particular needs. The retail industry has its version of tax reform, the manufacturing industry has its version, and the realtors association has its own idea as well. Pleasing all constituencies seems near-impossible, which makes the most likely result that little reform will actually ever happen absent a significant breakthrough.
Is it possible to pass a tax reform package that modernizes America’s tax code, while strengthening American manufacturing, protecting American consumers, and defending American workers? I believe so. Instead of tweaking the tax code to protect one sector of the economy at the expense of another, we need to totally overhaul the tax code to stimulate our entire economy. Senator Mike Lee (R-Utah) recently proposed a reform package which I wholeheartedly support. Lee recommends that we eliminate corporate income taxes altogether, and then offset the cut through increases in capital gains and dividend taxes.
Eliminating corporate taxes will lead to a surge of investment into the American economy, from both foreign and domestic sources, which will stimulate widespread economic activity. Eliminating the federal income tax will equally benefit all businesses, meaning that it will strengthen American manufacturing, hold-down costs for consumers (which is good for retailers), while also protecting American workers. The primary driver of offshoring manufacturing and importing domestic goods is our nation’s highest-in-the-industrialized-world corporate income tax. Eliminating corporate income taxes will help America retain manufacturing jobs, while becoming less-dependent on imports for lower cost goods.
Some may object to this plan because of the increase in taxation on capital gains and dividends as an offset to the corporate tax cut. They will likely claim that this will reduce incentives for investors to invest. This will be an unfounded fear in a zero income tax environment. By eliminating corporate taxes, investment income will skyrocket for investors in spite of any increase in taxes on gains and dividends. Even if investment income taxes rose as high as 30%-35%, investors would still be better-off because corporate income, which generates capital gains and dividends, would be tax-exempt. Investors and American workers would both be better-off, and the class warfare rhetoric of liberals would fall on deaf ears.
Eliminating America’s corporate income tax while increasing capital gains and dividend taxes is the best tax proposal Republicans can possibly adopt; it is truly a win-win-win proposition. This proposal will protect American workers, defend American manufacturing, keep costs down for consumers, and improve the overall standard of living for the American people. Republicans in Congress should stop listening to special interest groups and look-out for the interests of all Americans. This proposal is the best way to protect the American economy and ensure our nation’s global economic predominance for decades to come.