Rep Scott Garrett : Tax reform: a tall order
DECEMBER 21, 2014 LAST UPDATED: SUNDAY, DECEMBER 21, 2014, 1:21 AM
BY SCOTT GARRETT
THE RECORD
The code is also unfair, as many of the loopholes target small numbers of high-income individuals, while New Jersey’s middle-class families get stuck with the tab. It should come as no surprise that New Jersey has one of the highest tax burdens in the nation when you figure in the tidal wave of local, state and federal taxes.
Scott Garrett represents the 5th District in the House of Representatives. He serves on the House Financial Services Committee and the House Budget Committee. He is chairman of the Subcommittee on Capital Markets and Government-Sponsored Enterprises for the House Financial Services Committee, where he oversees the Securities and Exchange Commission and government-sponsored enterprises Fannie Mae and Freddie Mac.
ON MAY 1, 1931, with the push of a button at the White House, President Herbert Hoover officially commenced the opening of the Empire State Building. The 103-story structure was built with a powerful combination of steel girders, rivets and American ingenuity. This engineering feat and cultural icon took more than 7 million hours to complete.
There is another labor-intensive, American-made feat that happens every April 15. Unfortunately, we don’t get the productive equivalent of 192 Empire State Buildings for the 1.35 billion man-hours American workers spend filing tax returns each year. Instead, our outdated and complicated tax code rewards us with sluggish economic growth, wasted resources and a whole lot of frustration around the kitchen table.
We must fix our broken tax code and replace the outdated system with a pro-growth tax system, built upon the tenets of simplicity, fairness and efficiency. This is a tall order, but we have a lot at stake here in New Jersey and across the nation.
Currently, the U.S. tax code is the worst of all worlds. First, the system is notoriously complex, with individuals and families spending hundreds of billions of dollars a year trying to solve a numerical riddle of rules, deductions and tax schedules.
The code is also unfair, as many of the loopholes target small numbers of high-income individuals, while New Jersey’s middle-class families get stuck with the tab. It should come as no surprise that New Jersey has one of the highest tax burdens in the nation when you figure in the tidal wave of local, state and federal taxes.
Inefficient tax structure
According to a recent Monmouth University poll, half of New Jerseyans want to eventually leave the state because of the tax burden.
Moreover, the U.S. tax structure is as inefficient as a horse-and-buggy in the age of the high-efficiency hybrid engine. Considerations such as how to legally game the tax code, rather than business fundamentals, often distort individual decisions to work, save and invest. For example, tax economists Seth Giertz and Jacob Feldman argue that the tax code encourages businesses to switch their investments from productive activities (like hiring more workers) toward unproductive ones (like lobbying for special tax preferences).
As a result, not only is our current tax system unfair, but it also wastes resources, slows economic growth and leads to fewer jobs. We need to eliminate the special exemptions, simplify the rates and create a tax code that encourages savings, investment and job creation.
I remain hopeful that President Obama is willing work with Senate and House Republicans to revamp our tax code. Encouragingly, the White House website states “the tax code has become increasingly complicated and unfair. Under today’s tax laws, those who can afford expert advice can avoid paying their fair share and interests with the most connected lobbyists can get exemptions and special treatment written into our tax code.” Mr. President, I couldn’t agree more — now, it’s time to put meaning behind your words.
It is also important to recognize the political hurdles facing tax reform. While Republicans will control both the Senate and House in the New Year, without cooperation from the president, tax reform is as good as dead on arrival.
Serious about tax reform
The president has not yet demonstrated that he is serious about bringing tax reform across the finish line. Instead, the president views the tax code as a political tool to punish industries he happens to support (green energy) and those that don’t fit the party line, such as the oil and gas industry. Rather than talk about a simplified tax code to encourage job creation, the president remains committed to the theory that increasing the overall tax burden on working families in New Jersey somehow means these families are paying their “fair share.”
Most recently, the president threatened to veto a tax deal between the Senate and the House. Here is an example of both houses of Congress working together in a bipartisan manner, and the president killed the deal. For tax reform to work, the American people need a willing partner in the White House.
The American people gave Republicans the responsibility of controlling both houses of Congress for the next two years. In return, we can repay the American people by advancing solutions that help America’s families. And like President Hoover’s dedication of the Empire State Building, hopefully President Obama can work with Republicans to hit the switch and inaugurate another feat of American achievement: a reformed tax code.
https://www.northjersey.com/opinion/opinion-guest-writers/tax-reform-a-tall-order-1.1173284
