The United States needs tax reform — and soon. Our corporate tax rate is 35 percent, while the European average is 25 percent. We are not competitive. Our individual tax code has rates too high and too many politically driven tax credits and deductions. All true. But it’s also likely that no real tax reform will move in Washington for the next three years.
The Great Debate
With dueling budgets being introduced on Capitol Hill this week, the possibility of tax reform is the talk of Washington. As we predicted before last November’s elections, tax reform will be on the agenda in 2013 – but has its best chances in the states. We are seeing that demonstrated Thursday by Louisiana’s Republican governor, Bobby Jindal.
“Tax relief is an achievement for families struggling to enter the middle class,” the president trumpeted, shortly after Congress, by sweeping bipartisan margins and after a bruising battle, had lowered taxes for almost all Americans. “For hard-working lower income families, we have cut the bottom rate of federal income tax from 15 percent to 10 percent. We doubled the per-child tax credit to $1,000 and made it refundable. Tax relief is compassionate, and it is now on the way.”
A year ago Thursday in Osawatomie, Kansas, President Barack Obama delivered a fiery defense of the middle class. It marked a turning point in the president’s economic argument — and helped him win reelection, despite historic economic headwinds.
Policy and political circles are now both talking about the prospect of comprehensive federal tax reform next year. From Capitol Hill to Wall Street to Main Street, people are asking how this reform will be structured. They should look to states across the country for their model. Many are due to embark on sweeping overhauls, even complete rewrites, of their tax codes in 2013.
The surprise resolution of our national healthcare drama – the mandate is a tax! – has a kernel of solace for Republican partisans saddened by the constitutionality of Obamacare: The mandate is a tax! During President Obama’s 2008 campaign, he promised not to boost taxes on anyone who makes less than $250,000. Technically, the healthcare law now defies that promise.