It’s been more than three decades since we took a hard look at the United States tax system. While we’ve shrunk computers to the size of our pockets, the length of our tax code has nearly doubled since 1985. Outdated tax policies are stifling our economy and taking money out of the pockets of hardworking Missourians. That’s why I’m glad President Donald Trump came to our state last week to make the case for tax cuts and pro-growth policies that will strengthen our economy, boost wages, and help families get ahead.
As the president put it, families need a tax code that is “simple, fair, and easy to understand.” That’s far from what we have today. The Internal Revenue Service now has 199 individual income tax forms and more than 100 credits, deductions, exclusions and other provisions that affect how much American taxpayers send to Washington. According to the IRS national taxpayer advocate, businesses and individuals spend six billion hours each year simply trying to figure out how to comply with our complicated tax code. That not only imposes a significant burden on families, it hurts Main Street businesses.
In Missouri, 97 percent of all businesses are small businesses. The National Federation of Independent Business says that three-quarters of small businesses in this country are structured as pass-through entities, meaning they must pay tax on their business income at the individual rate. Some of these businesses are currently taxed at rates as high as 44.6 percent. That means that nearly half of their income is spent on their tax bill, instead of reinvesting in their businesses and creating more jobs with higher wages in our communities.
Larger U.S. businesses are also losing ground because of our broken tax code. America’s corporate tax rate, at 39 percent, is the highest among major economies in the industrialized world. Between 2003 and 2015, the average worldwide corporate tax rate declined from 30 percent to 22.5 percent, while the U.S. rate stayed the same. There is no reason the United States should be forfeiting jobs and economic growth to other countries.
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Most importantly, as the president made clear in his speech, it’s been too long since working families saw the kind of change in their take-home pay that makes a difference. There are two ways to increase take-home pay: better jobs and lower taxes. We need tax cuts that produce both. American families need more money in their wallets and better jobs to create more taxpayers.
In addition to our tax policies, it’s imperative that we continue working to reduce red tape that makes it harder for businesses to grow and plan for the future. President Trump and the Senate have already scrapped more than a dozen last-minute regulations handed down by the previous administration, which will save $3.7 billion in total regulatory costs and eliminate 4.2 million hours of paperwork. I’ve also been encouraged by the president’s swift action to undo excessive energy regulations that would have dealt a huge blow to Missouri job creators, especially in energy-intensive industries like manufacturing and agriculture.
As a transportation hub, agriculture leader, and home to more than half a million small businesses, Missouri is positioned to be at the cutting edge of growth and innovation in this country. But, we need the right policies to get us there and pro-growth tax cuts and regulatory reform are a critical part of that equation. I couldn’t agree more with the president’s call to get this done, and I look forward to working with him and my colleagues in Congress to provide much-needed tax relief for Missouri families and small businesses.
Republican Sen. Roy Blunt represents Missouri in the U.S. Senate.