Ever since President Trump took office most of his promises made on the campaign trail are on track to be fulfilled. One of those promises, the repeal of Obamacare, has recently come to a halt due to lack of support of many officials from his own party who won their re-election on the promise of repealing Obamacare. President Trump is not going to let that stop him, so now he is moving on to another promise which is the tax code. The tax code which impacts every single Stanly County citizen, and all of those who conduct business in this area. President Trump recently said that “Our painful tax system has become a massive barrier to America’s economic comeback…It costs us millions of American jobs, trillions of dollars, and billions of hours wasted on paperwork and on compliance. Our tax code is a giant self-inflicted economic wound.”
Lately it seems that the tax code has become more and more difficult to understand and more and more of a burdensome task. The number of tax brackets has increased from two to seven, and the top tax rate on individual income crept above 40 percent when the Obamacare tax hikes are considered. On average, it takes a single individual an estimated 13 hours to fill out the basic 1040 tax form. This is a miserable experience for everyone. Advocates believe the tax code needs to be condensed, so it is easy to fill out for yourself and understand.
Every year Americans struggle to file their taxes and ultimately make errors. The Treasury Inspector General for Tax Administration estimates 24 percent of all Earned Income Tax Credit (EITC) payments made in 2013 were erroneous. An estimated 95 percent of families would be able to do their taxes on a single page without having to keep records and paperwork to track numerous itemized deductions.
It has been 31 years since the last tax reform. Republicans in Washington are advocating for a tax code that is simple for all Americans. The current tax code includes over 70,000 pages of forms, instructions, court decisions, and other guidance — longer than the Bible, with none of the good news.
Since it seems Obamacare cannot successfully be repealed and replaced the president should then make tax reform his number one priority on Congress’s agenda.
Middle-class Stanly county citizens need tax reform. Trump’s plan nearly doubles the standard deduction to $24,000. This means the first $24,000 an individual makes could be tax-free. The president’s plan cuts through the complexity by eliminating all itemized deductions except for the deductions for home mortgage interest and charitable contributions. The tax payer could simply claim the first $24,000 as a standard deduction. Higher taxes on corporate America means fewer opportunities for middle-class individuals to find work. The current tax code is a burden to small business owners who spend between $18 billion and $19 billion annually on tax compliance with paperwork costs totaling an estimated $74.24 per hour.
Americans have seen firsthand what recession looks like, and that job security is not always that secure. With a shortage of jobs in our community we have more people that are overqualified looking for positions. With tax reform, comes more opportunity for those people. There are apparent positive economic outcomes to a simplified tax code under the president’s proposed plan. President Trump wants to do something similar to what President Reagan did with the Tax Reform Act of 1986. During his presidency, President Reagan reduced the corporate tax rate from 46 percent to 34 percent.
If the President is successful in getting tax reform passed, the intended outcome would be three percent growth and the creation of 12 million new jobs. Tax reform would impact Stanly County, and rural North Carolina tremendously.