To spur job creation, America needs a tax code that is simple, fair and fuels economic growth -- a tax code that makes America competitive again and provides certainty. And our political leaders in Washington need to end the uncertainty caused by cycles of deadlines, crises, and “fiscal cliffs.” Congress has repeatedly let critical provisions of the tax code expire, hurting our economy and creating uncertainty for Georgia businesses.
It is past time for Congress to pass lasting, comprehensive tax reform.
Georgians I have spoken to during this campaign know our tax code is broken. They know our tax code is too complicated and costs Georgia jobs. Everyone recognizes the problem, but Washington politicians have been unwilling to fix it.
Passing comprehensive tax reform will require leaders who care more about solving problems than scoring political points. Overhauling our tax code will require compromise and sacrifice, but there are several principles that will guide me as I consider any tax reform proposal:
Our Tax Code Should Promote Job Growth: Our current tax code is hurting America’s economic competitiveness and costing Georgia jobs. In addition to the substantial costs of compliance, our high corporate tax rates make it harder for American businesses to compete, and our outdated tax system leaves trillions of dollars parked offshore. Small businesses and large companies agree: we need lower rates and a simpler tax code that lets entrepreneurs focus on growing their businesses, not filling out their tax returns.
Some steps we could take to help U.S. businesses compete include:
• Lowering the corporate tax rate. America’s businesses are now burdened by the highest corporate tax rate in the world – a burden that falls especially hard on small businesses that lack the ability take advantage of complex tax planning measures to reduce their tax burden.
• Keeping American companies competitive. A lower corporate tax rate would also help make sure our tax rates on income earned overseas are competitive with those of other countries. Our outdated tax policy is preventing almost $2 trillion from being brought back to the U.S. We need to enable U.S. businesses to compete successfully in the global economy, and put that money to work here in Georgia.
• Eliminating tax breaks for companies who close factories and ship jobs overseas. Currently, a business that closes a factory and sends those jobs to China can claim a tax deduction. We need a tax code that encourages job creation here in Georgia, and rewards companies who chose to invest in our communities.
• Encouraging U.S. manufacturing. Too many companies perform their R&D in America, but manufacture their products overseas. Doubling the R&D tax credit for companies that move manufacturing to the U.S. is a way to reward companies that bring manufacturing home.
• Extending small business startup deductions. Small businesses and startups can now deduct more of their initial capital investment, but this provision is in danger of expiring. Making this provision permanent would give small businesses and entrepreneurs greater certainty and increase their ability to invest and grow.
We Should Simplify our Tax Code to Help Families & Businesses: Congress needs to reduce the complexity of the code for both individuals and businesses. Americans spend 6.1 billion hours a year complying with tax law at a cost of $168 billion each year – roughly 11% of the annual revenue raised by federal taxes. And 60% can no longer do their own taxes, they must pay professionals to fill out their returns. Even without any other changes, a simpler tax code will reduce costs for Georgia families without increasing the deficit.
Some of the steps we could take toward a simpler tax code include:
• Expanding the standard deduction while closing unnecessary loopholes will simplify our tax code and eliminate complicated and time-consuming paperwork for Georgia families.
• Simplifying overlapping and confusing tax benefits will reduce paperwork and help taxpayers receive the benefits they deserve. For example, our tax code currently offers four different broadly-used benefits for households with children, and contains at least 18 different provisions benefiting taxpayers with educational expenses. Condensing or at least simplifying filing for these tax credits would lead to significant savings and a simpler tax code.
• Clarifying definitions to simplify filing. The tax code uses three different definitions of “child” for common tax credits – a single definition would make these tax credits easier to claim and cheaper to administer.
Our Tax Code Should Promote Innovation: America’s economy is driven by innovation, new businesses, and new technologies. Our tax code must support the entrepreneurs that are driving the next wave of American innovation and creating the jobs of the future. We can empower the next generation of innovators through steps like:
• Extending the R&D tax credit. Innovators are the lifeblood of our economy, but Congress let the nation’s research tax credit expire for the fifteenth time in 2011. We should expand the R&D tax credit and make it permanent – so that the next Facebook starts in Georgia, not in China or Europe.
• Increasing the startup deduction. Congress can permanently double the startup deduction for new businesses to $10,000 to help foster innovation and job creation.
• Simplifying small business filings. The complexity of the tax code falls particularly hard on small businesses and individual entrepreneurs, which spent close to 1.8 billion hours and $16 billion in 2004 on tax compliance. Congress must simplify record keeping and reporting requirements for small businesses by expanding cash accounting and simplifying recordkeeping for cell phones and other devices.
Reform Should Make Our System More Fair: Our tax code must be fair to all Americans, and continue our tradition of shared sacrifice that asks those who have the most to contribute more to our communities.
• Our tax code is riddled with loopholes that allow some individuals and businesses to pay next to nothing while middle class families and other businesses face spiraling tax burdens. Congress needs to ensure that the tax code treats everyone fairly – not carve out special benefits for well-connected insiders.
• Congress must hold accountable individuals or corporations who abuse the tax code. One five-story building in the Cayman Islands claims to be home to more than 18,000 companies – Georgia families know that kind of exploitation needs to be stopped. That’s why we need to authorize the Treasury to take steps to curtail known tax havens and increasing reporting requirements for companies and individuals with substantial assets offshore.
Reform Shouldn’t Raise Taxes: Georgia families continuing to recover from the recession should not bear the burden of tax increases, especially in these difficult economic times.
• Although individual reforms will effect each family differently, I will not support any proposal to overhaul the tax code that increases the overall tax burden on Georgia families.
• I am deeply concerned about the spiraling federal debt, and I will not support tax reform proposals that increase the debt.