It’s tax season, baby! (Cue explosions)
Time to sit down and figure out how much money you are going to be forking over to government programs like Social Security and Medicaid! But the amount that you give back yearly might being changing in the near future.
It is generally well known that the U.S. is desperately in need for a tax reform plan to overhaul the entire system — and that’s a generous assessment. The entire American tax code is messier than an Adam Sandler movie. It has more loopholes than a mile-long crazy straw. A tangled heap of rules and regulations have created an environment where Americans waste nearly 6.1 billion hours complying with tax code every year.
As taxpayers across the country begin to pull out their own hair, in comes the senatorial equivalent of peanut butter and jelly: Marco Rubio (Bush-Rubio dream ticket for 2016 anyone?) and Mike Lee. They have a new tax plan that focuses on economic growth and lifting American incomes.
The foundation of the plan relies on a number of pro-growth provisions that would involve cutting the top tax rate on business income to 25 percent, eliminating taxes on capital gains, and putting an emphasis on taxing domestic income but not foreign income, while simplifying the current seven bracket systems to two brackets. Other aspects of the plan would eliminate unnecessary burdens such as the death tax, which taxes estates and inheritances, and double tax on dividends, which is the idea of corporations paying tax on their earnings and shareholders individually paying tax on that same source of income. What it boils down to is that the Rubio-Lee plan essentially is a glorified tax cut.
But, this seems to be just what the doctor ordered.
Findings from the Tax Foundation suggest that the reform would grow the economy by 15 percent over the next years, boost wages by 12.5 percent and increase employment by nearly 2.7 million jobs. The study even finds that, within 10 years, the plan would raise government revenue by $94 billion per year due the 15 percent larger economy.
While the Rubio-Lee plan is especially strong in increasing saving and investment and improving international competitiveness, one of the most important impacts of the plan would be that the proposal makes a major expansion of the Child Tax Credit. The plan would increase the current tax credit of $1,000 per child to an additional $2,500 per child that would act as creditable and applicable against the parent’s income and payroll taxes. While this element of the tax plan does not necessarily do much to help economic growth, where non-expansion of the CTC could go into slashing more tax rates, the larger Child Tax Credit does more for the opportunity and economic freedom for the average American family, as both the cost of living goes up and wages continue to be stagnant at best.
The fact is that this is a plan that both Democrats and Republicans can chose to support. It grows prosperity, creates jobs and helps American families. Additionally, and most importantly, it looks very attractive to the independent voter.
Reach the columnist at ndsmit12@asu.edu or follow @noahsmith1996 on Twitter.
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Editor’s note: The opinions presented in this column are the author’s and do not imply any endorsement from The State Press or its editors.
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