While the U.S. Congress has struggled this year with many issues, I’m hopeful that when our senators and representatives return from their August recess they will enact pro-growth tax reform to accelerate the nation’s economic growth and allow families and businesses to prosper.
As a banker, I have worked with hundreds of Utah businesses and I am confident that comprehensive tax reform will help them invest, grow and hire more employees. I hope Utah’s members of Congress and their colleagues nationwide will support smart tax reform that simplifies our tax system and treats all businesses fairly.
Last month, congressional leaders, including Utah Sen. Orrin Hatch, who chairs the tax-writing Senate Finance Committee, issued a joint statement pledging to improve the nation’s tax system.
“We are all united in the belief that the single most important action we can take to grow our economy and help the middle class get ahead is to fix our broken tax code for families, small business, and American job creators competing at home and across the globe,” said the statement from congressional leaders. They called it a “once-in-a-generation opportunity.”
I fully agree with that statement. If Congress can pass meaningful tax reform, it will be a historic accomplishment. Comprehensive tax reform can contribute to the financial success of America’s families, businesses and communities.
Federal tax reform should include these elements:
— Simplify the tax code for families and businesses to reduce the heavy burden of complying with the bloated and complex federal tax code.
— Reduce tax rates for all classes of taxpayers, but broaden the tax base to prevent the federal debt from exploding. Broadening the base provides opportunities to end tax policies that pick winners and losers, that provide advantages to certain businesses and industries.
— Provide a level playing field and fair tax rates so American businesses can compete with foreign businesses and so American companies can bring back jobs, cash and profits currently sheltered overseas.
— Provide a transition period to allow adequate time for the market to adjust to the new system.
When lawmakers get into the details of tax reform, progress will become more difficult as businesses and industries try to protect their own interests. Lawmakers need to use wisdom and fairness in reducing taxes, broadening the base, and leveling the playing field.
In my own financial services industry, the marketplace has been distorted because of tax exemptions and benefits that once made sense but no longer fit current business practices. As industries change over many decades, the tax structure needs to be modernized to keep pace.
As Congress seeks to broaden the tax base, treat businesses fairly and end the practice of picking winners and losers, our representatives should review tax policies that benefit one business or industry over another. A basic tax principle ought to be that businesses offering similar services should be taxed equally.
In addition, Congress should look at provisions in federal tax laws that prevent states from creating impartial and balanced tax structures. Consistent with the principles of balanced federalism, the federal government should not pre-empt states in their application of state and local taxes.
In some cases, federal tax policy and regulations are eroding state tax bases, costing state tax revenue and hurting states’ ability to meet the essential needs of their citizens, especially education funding.
As tax reform takes center stage in Washington, D.C., I’m hopeful the results will be a fairer, well-balanced system that reduces tax rates, broadens the base and treats similar businesses fairly.