President Trump introduced a basic platform for restructuring the tax code during a speech in Springfield Wednesday afternoon. Republicans, who control Congress and the White House, have moved on to other priorities after failing to overhaul the healthcare system.
The President’s message for individual income taxes was to make them simpler and eliminate loopholes. He declined to be specific, except to say that they needed to be lower.
Trump praised the 1986 tax rewrite under Republican President Ronald Reagan for eliminating many loopholes and reducing brackets, but said the code had since become too complicated. He said it “disadvantages ordinary Americans who don’t have an army of accountants”.
The President again referenced the Reagan overhaul of 1986 when he segued to corporate taxes. He noted business taxes were slashed to 34% at that time, but said other countries around the world quickly responded by making much deeper cuts.
Trump was specific with numbers only once during his 34 minute speech. He reiterated a proposal he’d offered as recently as April, saying ideally corporate taxes should be reduced to 15% from the current rate of 35%. Trump blamed an outflow of jobs to foreign countries on high business taxes.
He also said taxes on income businesses could bring back to the U.S. would be lowered, which he said would give less incentive to the practice of parking money overseas.
Trump’s speech generally fell in line with the thinking of conservative policy groups. Americans for Prosperity (AFP), the organization funded by the Koch brothers, favors reduced taxes and the removal of subsidies and loopholes.
AFP Missouri’s Jeremy Cady agrees with Trump’s assessment that the code needs to be vastly simplified, noting 90% of filers need assistance from accountants. “$409 billion was spent in 2016 on complying with the tax code” said Cady. “And over 8 billion hours of time was actually spent complying with the tax code. So we need to make the code simpler.”
Cady also echoed Trump’s Wednesday remarks by stating that lower tax rates across the board would bring jobs back to the U.S. “Our rates right now are high. They make us less competitive with other nations across the world. And I think if we want to bring jobs back to America, the best way to do that is by starting to reduce that rate.”
The RATE Coalition advocates specifically for lowering and simplifying corporate taxes. It was formed in 2011 and has 35 major U.S. corporations among its membership, including AT&T, Boeing, Ford and Disney. Not surprisingly, it’s happy with the platform Trump rolled out in Springfield.
RATE Coalition Co-Chair James Pinkerton is optimistic a Republican President and GOP lead Congress will push through a major overhaul of the tax code. “We believe that now, finally, we are poised for a breakthrough that will fix America’s tax code, and make it friendlier to economic growth and job creation.” The RATE Coalition favors a reduction of business loopholes as well as lower corporate taxes.
The left-leaning Missouri Budget Project is more skeptical of Trump’s contention that corporate taxes need to be lowered for the U.S. to be competitive.
The Project’s Tracy Gleason contends businesses aren’t benefiting from lower rates in other countries. “We might have a higher maximum tax rate, but when you take those loopholes and tax breaks into account, the United States is actually pretty much in line with other countries,” said Gleason.
During his address, Trump emphatically declared that middle class taxes would be lowered under his watch. Gleason says a framework laid out by the President earlier this year doesn’t match up with that claim.
“When you look at that framework, you see that the benefits really disproportionately go to the highest incomes. The truly middle class would actually, probably end up paying more for services they lose than they would actually see in any kind of tax cut.”