While the giddy Democrats are waking this morning to congratulate themselves for having staged a publicity-garnering sit-in on the floor of the House, Speaker Paul Ryan and the House Republicans today will release a serious new tax plan called the "Better Way” agenda.
The aim is to jump start our sluggish economy and return the United States to prosperity. No, it's not as much fun as singing "We Shall Overcome" on the House floor, but it might help millions of Americans do better economically.
Rep. Kevin Brady, a Republican from Texas, hit the highlights of the plan this morning in the Wall Street Journal:
It delivers simplicity and fairness, yet is built primarily for growth in jobs, paychecks and America’s economy.
To start, the House GOP plan brings long-awaited relief to workers and families from the recurring nightmare of tax season. By lowering rates, increasing the standard deduction, streamlining seven tax brackets into three and eliminating a host of special-interest provisions, our blueprint simplifies the tax code dramatically for families and individuals. And by providing incentives for savings and investment, it fosters economic growth and job creation while ensuring that Americans spend far less time and money filing their taxes.
For years, people have begged Washington for a tax code that is simple and easy to understand. Under our blueprint, that’s exactly what they will find—especially come Tax Day on April 15. For the first time in modern history, most workers and families will be able to file their taxes on a form as simple as a postcard.
Second, a tax code built for growth must support the success of America’s small businesses and the millions of workers they employ. To promote job growth, for the first time small businesses will no longer be taxed under the individual side of the code. Instead, they’ll benefit from a critical distinction between wage and business income. This allows for a lower tax rate for small businesses of 25%—the lowest tax rate on pass-through income since before World War II.
Job creators of all sizes will also be able to take advantage of full and immediate expensing on investments in new equipment and technology—another historic first. This zero tax rate on new business investment is a vast departure from today’s complex depreciation rules, which direct businesses to write off purchases over long and often arbitrary periods of time.
Full and immediate expensing will free up more cash for operation and expansion, which translates into more jobs.
The U.S. corporate tax, now an astonishing 35 percent and the steepest in the industrial world, would be cut to 20 percent. Companies will no longer be taxed at home and abroad, which will also lead to more job creation. The new plan calls for no tax on dividends brought home. This will encourage companies to bring money home.
And here's what I like best:
Finally, a simpler, fairer tax code demands a simpler, fairer tax collector. This new tax system returns power back to the taxpayer, and puts the primary focus of the Internal Revenue Service back where it belongs—on serving American taxpayers.
The current IRS will not exist, but will be redesigned into three distinct service units—one staffed with expertise on business taxation, and another focused on state-of-the art customer service to families and individuals.
In a way, Republicans are singing "We Shall Over Come," too–they want to overcome an outdated tax code that prevents Americans from having the opportunities that we traditionally have enjoyed.