As of March 2017, our state’s unemployment rate was over 3%. Granted, these numbers are not awful, but I would argue there is room for improvement. Many of these jobs are held by people who had better paying jobs just a few years ago. And we still have too many who have taken themselves out of the potential work force and this makes that 3% number look better than it really is.
Our state’s economy should be and can be much stronger. The most important thing we can do to make this a reality is overhaul the burdensome federal tax code.
It’s been more than 30 years since our tax system underwent serious reform. Today, the tax code is too complex, too long, too unfair to small businesses (where most employment takes place), and has a far too high corporate rate. These factors prevent Virginia’s small businesses from growing, creating jobs, and maintaining vibrant local communities. The Thomas Jefferson Institute for Public Policy supports tax reform that will put in place a lower tax rate and foster an environment in which Virginia’s business community and our citizens can thrive.
The current federal tax code is incredibly complex and far too long—roughly 70,000 pages of incomprehensible jargon. This complexity makes it nearly impossible for small-business owners to file their own taxes, effectively forcing our small businesses to hire expensive professional tax preparation services. This is also true of the average taxpayer who finds the tax code simply too complex to navigate without professional help.
At the same time, big businesses and the wealthy individuals can afford armies of lawyers and accountants to make sure they pay as little tax as possible by taking advantage of the loopholes that are buried inside these 70,000 pages. This gives big business a major competitive advantage over small-business rivals. The tax code must be made more fair for small businesses by getting rid of the vast majority of these loopholes while also greatly simplifying the tax code itself.
At the same time, it is vital that Congress and the President actively work to cut the corporate tax rate down considerably. At 35%, our nation has a corporate tax rate that is the highest in the industrialized world. This puts all American businesses at a significant disadvantage in the global marketplace. Cutting the rate to a more reasonable level — maybe to 20% — would go a long way towards improving the competitive position of the U.S. business community. Indeed, a couple of years ago in congressional hearings, business executives testified that they would support getting rid of many loopholes if the corporate tax rate was significantly reduced. Yet, nothing has happened!
If our leaders in Washington, D.C., are able to pass a modernized tax code along these lines, their efforts will translate into higher paying jobs and a more competitive job market in Virginia, stronger growth, and thriving small businesses, wealthier working families, and more vibrant communities.
Congress and the President have both introduced plans that generally align with the pro-growth approaches outlined above. Now they must move forward and actually get a final plan passed and on the books so our state and nation can return our economy to robust growth.
An economy that is growing at a more reasonable and historic rate of 3.5% to 4.00% (which we haven’t seen in ten years), will do wonders for our country. Our companies will prosper, more people will be hired at better wages, the federal deficit will decrease, our entitlement programs will be on firmer financial footing, etc.
We cannot afford to wait any longer or we will pass up this unique opportunity. In 2017, both houses of Congress and the White House are in Republican hands. This should make reasonable tax reform easier. We may not see another chance like this to reform the federal tax code for a very long time. It is time for our elected officials to support serious tax reform that will encourage economic growth, boost investments in the Commonwealth, and create a more robust economic future for all Virginians.
For too long, we have accepted the status quo and allowed our small-business communities to suffer and placed our major corporations in a less competitive position worldwide. This has been done by policy voted on by our elected representatives. It’s time to make the tax code work for better for our businesses, large and smaller, and for our families as well. It’s time we close unfair loopholes, lower our tax rates on businesses and on individuals. And we must not forget that many small businesses are “Subchapter S” corporations and pay taxes at the individual tax rates. Lower individual taxes will be a big boost to these small businesses. Tax reform will re-energize Virginia’s business community bringing wholesome good-paying jobs back to our state. It will do the same nationwide.