Jane Timken, chairman of the Ohio Republican Party, suuports that the plan is “a once-in-a-generation opportunity” for economic growth
Tax reform will benefit working Ohio families: Jane Timken (Opinion)
CANTON, Ohio — In 1986, I was in high school, Bernie Kosar led the Cleveland Browns to the AFC Championship and President Ronald Reagan oversaw the last overhaul of the U.S. tax code.
In the years that followed, President Reagan’s tax reform contributed to the second-longest period of sustained growth in American history. Compare that to the recovery during the presidency of Barack Obama, which was the slowest U.S. economic recovery since World War II.
Everyone benefited from tax reform, especially working families. Tax reform gave the United States one of the most competitive tax systems in the industrialized world, and it worked. The economy thrived, adding 35 million jobs, and family incomes grew. Even the government benefited from tax reform. In fact, individual income tax revenues rose from $244 billion to $446 billion under President Reagan, despite large tax cuts.
Unfortunately, 31 years later, times have changed and our tax code has become punishingly complex, making it harder for families to save and for businesses to grow.
Today’s tax code contains seven individual income tax brackets, which impose higher taxes on family incomes as they climb the economic ladder. It is so long and difficult to understand that nine out of 10 Americans hire a professional, or buy software to complete their taxes every year. Americans also spend more than 6 billion hours a year complying with the tax code. That’s time and money that families should be spending together.
Other countries have aggressively cut their corporate tax rates to compete, and the United States now has the highest business tax rate in the developed world. This has put American job creators at a huge disadvantage. As a result, American companies have moved their facilities and jobs out of the country to escape our burdensome tax code and avoid our high corporate tax rate. Right now, Fortune 500 companies are holding more than $2.6 trillion in profits offshore instead of investing in the American economy and American workers.
However, large companies are not the only businesses being strangled by the tax code. The majority of American businesses are small businesses. These mom and pop shops on Main Street often do not pay the corporate tax rate, but instead pay taxes as individuals with a top rate of 39.6 percent, and can pay up to 50 percent of what they earn after state and local taxes are included. Forking over such large portions of their earnings makes it difficult for small businesses to expand, hire more workers and increase wages.
Simply put, America’s broken tax code is holding all of us back.
During the 2016 election, President Donald Trump and Ohio Republicans promised to pass comprehensive tax reform that delivers tax relief to all Americans, spurs economic growth, and brings jobs back to the United States.
To deliver tax relief, this framework eliminates many of the deductions that are primarily taken advantage of by the wealthiest Americans, as well as the current personal exemption, in order to double the standard deduction so that the first $12,000 earned by individuals and $24,000 earned by married couples is tax-free.
Next, it lowers tax rates and reduces the number of tax brackets from seven to three, increasing the number of Americans who will pay zero federal taxes.
Significantly increasing the child tax credit and extending it to more families will benefit the middle class, as will simplifying the tax code so that Americans can file their taxes on a single page and avoid spending billions of hours and dollars every year to comply with it.
To spur economic growth and create jobs, we must restore our competitive edge in the global economy and bring relief to Main Street.
This plan will once again give America an advantage over foreign nations in attracting major investments by putting our corporate tax rate back in line with theirs. The plan also caps the small business tax rate, for sole proprietorships, partnerships and S corporations, at 25 percent and allows small businesses to write off the cost of capital investments over the next five years, which will encourage them to expand, hire more workers and increase wages.
Ohio Republicans support this plan because it offers a once-in-a-generation opportunity to usher in a new era of economic growth, bring back American jobs and investments from overseas, and allow Ohio families to keep more of their hard-earned paychecks.
It’s time for Ohioans to benefit from a roaring economy again, like they did after tax reform passed in 1986. I wouldn’t mind seeing the Browns in another AFC championship, either. Maybe next year.
Jane Timken is chairman of the Ohio Republican Party, serving since January. She is the first female chairman of the state GOP.
