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We Are Going to Fix This Nation's Tax Code Once and For All
Thank you very much, Jay.It is such an honor to follow my dear friend, our Vice President, Mike Pence.Together, we are working on a bold agenda for the country. Regulatory reform. Health care reform. Tax reform. Rebuilding our military. And after years of talking about these problems, we are finally doing something about them.But I do not view this as a simple checklist of government. Or just turning the page on the policies of the recent past.
This is much bigger than that. And it goes back to something I talked about not long after I became Speaker, but something that is as relevant as ever today.It is about building a confident America. An America where people are confident they can get a job that pays well in an economy that is growing. An America where people are confident that their children will grow up with real security and opportunity.And we want an America where people are confident we can withstand any challenge, and emerge even stronger.This, to me, is the great task before us.
Because these are anxious times. We all feel it.It is not something we often think about in the rush of our daily lives, but we are being tested. Our capacity to come together and to always move forward toward a better, stronger nation is being tested.That is what defines us as Americans. It is not about our struggles. It is about how we overcome them—how we bounce back.
So this is what drives me every day as a policymaker: How do we build up our country’s antibodies? What I mean by that is, how do we fill up that well of resilience we can call on when things get tough?I believe I have come to the right place to talk about how we get there.How many times in recent years have the so-called experts told us that American manufacturing is never coming back? That its best days were in the rear view mirror.But right now, there are nearly a million more Americans working in manufacturing than there were at the beginning of this decade. Manufacturing is thriving across the country.Now you know as well as anyone how quickly things can change. And when they do, will we be able to say that we are ready? Will our workers be ready to take on jobs that do not even exist yet? Will our economy be ready to handle disruptions that we cannot fathom yet? That is our test.
And that is why, working with President Trump, we are delivering on an agenda to create jobs and grow our economy.To begin fixing our regulatory system, we have repealed Obama-era red tape with a legislative tool known as the Congressional Review Act.
Before this Congress, this tool had only been used successfully once. Once in the 20 years it has been on the books.But since January, 14 Congressional Review Acts have been signed into law. It is estimated that these actions could save families and businesses more than $36 billion.And we are just getting started.To revitalize Main Street, earlier this month the House passed the Financial CHOICE Act.You have seen as much as anyone the hit that community banks have taken from the countless costly rules coming out of Washington. These banks are the very lifeblood of credit for small business across our country.
Our plan will give real relief to community banks, and make it easier for small businesses to get the capital they need to grow and hire.Another thing we need to do to make our workforce more resilient is close the skills gap. This is so important. We need to connect people with the skills they need to get good-paying, in-demand jobs.That is why, on Thursday, the House will be taking action on critical legislation to expand career and technical education. This has strong support from both sides of the aisle, and we need to get it to the president’s desk.And our work continues to repeal and replace Obamacare. Because this law is clearly collapsing.
Americans nationwide face rising double-digit premium increases.
And coverage choices are disappearing.
In 30 percent of the counties throughout America, people have one or no plans to choose from.
This month, Anthem decided to quit the Obamacare exchange in Ohio, leaving 18 counties with zero coverage options next year.
Last month, Blue Cross Blue Shield decided to quit the Missouri exchange, leaving 25 counties with zero coverage options.
And also last month, Medica signaled it will quit the Iowa exchange, which would leave 94 of 99 counties in the state—70,000 people—with zero coverage options.
So this is the story across the country. Higher premiums. Little or no choice. A death spiral.
We are engaged in nothing short of a rescue mission to finally bring relief to Americans struggling under the law, and give everyone access to the care they need.
So in just five months, we have made some real progress getting government out of your way. And your support has been a big reason why. Thank you.But once in a generation or so, there is an opportunity to do something transformational—something that will have a truly lasting impact long after we are gone.That moment is here and we are going to meet it.Ladies and gentlemen, we are going to fix this nation’s tax code once and for all.
You may recall that the last time we did this was three decades ago—the same year I got my driver’s license. Yes, a lot has changed since then. Our economy is more interconnected with the rest of the world than ever before. The Internet has transformed the way we do business and go about our lives.
But as the world changed, our tax code has remained stuck in neutral. It has ballooned to 70,000 pages of rules and regulations that few people today actually understand. There is an old line about this: our tax code is about five times as long as the Bible, but with none of the Good News.
President Trump recently introduced a set of principles for tax reform, and right now we—the House and Senate—are working with the administration to turn them into a transformational tax reform plan. Chairman Kevin Brady and our Ways and Means Committee members are holding open hearings and meeting with stakeholders on this right now.
I want to take a few minutes to walk you through what that kind of reform will look like.
Let’s start with families and individuals.
At some point along the way, our tax system started working for the tax collectors rather than the hardworking taxpayers.
Look at what happens during tax season. I could describe the complexity of the code all day, but what really defines our tax code is that sense of dread that you feel. You know that feeling?
You have to navigate long, complicated forms to file your returns. You need to wade through a seemingly endless amount of deductions and credits, each with its own rules and eligibility requirements.
And then, after you tally up those deductions, you are placed in up to seven different federal tax brackets based on your income level.
And at the end you hope—I mean really hope—that you do not owe a bunch this year. You hope, because you do not really know ahead of time. How could you? This whole system is too confusing, and just too darn expensive.
We have got to stop this madness. Don’t you agree?
So let’s start over.
First, we will eliminate harmful, burdensome taxes including the death tax and Alternative Minimum Tax.
Next, we will clear out special interest carve outs and excessive deductions, and focus on keeping those that make the most sense: home ownership, charitable giving, and retirement savings.
We will consolidate the existing seven brackets into three, double the standard deduction, and simplify things to the point that you can do your taxes on a form the size of a postcard. Wouldn’t that be nice?
And finally—and most importantly—we will use the savings from eliminating these loopholes to lower tax rates.
Let me say that again: We are going to cut taxes.
But if we are going to truly fix our tax code, we have to fix all of it—both for individuals and businesses. Why? Because this will create jobs.
That is what this is all about: jobs, jobs, jobs. Good, high-paying jobs.
As a matter of fact, the nonpartisan Tax Foundation has estimated that our blueprint would create 1.7 million new full-time jobs.
How do we do it?
Well, right now, we have the worst business tax system in the industrialized world.
Most people do not realize this, but here in America, 8 out of 10 businesses file their taxes as individuals. In fact, most of our jobs come from these new and small businesses. And under our crazy system, successful small businesses pay a top marginal tax rate of 44.6 percent.
Look, you all know this. Manufacturing employs more than 12 million Americans and adds more than $2 trillion to our economy every year. And the overwhelming majority of these companies are small businesses.
At the same time, our corporate tax rate—for the rest of American companies—is 35 percent.To put this into a global perspective, overseas—which where I come from means Lake Superior—companies in Canada pay just 15 percent. Heck, the average tax rate on businesses in the industrialized world is 22.5 percent. Yet our corporations pay 35 percent and our successful small businesses pay 44.6 percent.How can we compete like that? We can’t.But it actually gets worse.
You see, the status quo encourages companies to move operations overseas, to make things abroad, and to then sell them back into the U.S.This makes no sense, and it is costing us jobs.
We are actually very unique in the world in the way we discourage capital from coming back to America and how we incentivize off-shoring jobs. This is not the kind of exceptionalism we should aspire to.
Today, U.S. companies are leaving to become foreign companies, when it should be the other way around. We want foreign companies to become U.S. companies.
We must think differently, so that once again we make things here and export them around the world. There are a number of ways to achieve this—we in the House have our own idea—and that is one of the things that we are discussing with the administration.
But the bottom line here is this: We cannot accept a system that perpetuates the drain of American businesses overseas.
My view is this: We should not just try to play catch up with the rest of the world.
We should not just aim for the middle of the pack.
Let’s not accept following in any other country’s wake.
Let’s be the best once again.
Part of this is moving to what we call a territorial system that reverses this trend of corporate inversions, and enables businesses to bring back cash stranded overseas without being taxed.
Right now, if an American company makes money overseas, it gets taxed over there. But we also tax it again if the company tries to bring that money back to the U.S. Almost no other country does this. And as a result, it is preventing many companies from bringing that money home. They just keep it over there. It is literally stranding trillions of dollars that could come into our economy. We have to fix this. And we will.
And of course, real tax reform means slashing our corporate tax rate as low as possible.
This means eliminating special-interest carve-outs and replacing them with lower tax rates for all businesses.
And this means creating a new, lower tax, specifically for small businesses, so they can compete fairly, on a level playing field.
There is one last piece to this puzzle, and it goes back to the idea that all of this is about looking down the road, and planning for the future.
These reforms—these tax cuts—they need to be permanent.
Every expert agrees that temporary reforms will only have a negligible impact on wages and economic growth. Businesses need to have confidence that we will not pull the rug out from under them.
They need the certainty from permanent tax cuts to hire more workers, invest in their businesses, and plan for the future.
So that is an overview of our plan, which will we begin to turn into legislation to put before the Congress.
It is ambitious, yes, but it has to be.
Now I know that the cynics and naysayers are out in full force.
You will hear that tax reform is coming along. You will hear that it is dead. Then you will hear it is back on track. Then you will hear it is on life support.
Sometimes you will hear all of this in the same week, the same day, or heck, even the same hour. Do not be surprised by any of it.
But I am here to tell you: We are going to get this done in 2017. We need to get this done in 2017. We cannot let this once-in-a-generation moment slip by.
Yes, the defenders of the status quo—and there are many—are counting on us to lose our nerve, to fall back, or put this off altogether.
But we will not wait for a path free of obstacles, because it does not exist.
And we will not cast about for quick fixes and half-measures.
Transformational tax reform can be done, and we are moving forward. Full speed ahead.
I promise you that we will give it all we have.
Today, I am asking you to do the same.
Get in this fight. Help us get this done.
Help us make this difference.
Help us build the confident America that our children deserve.
Thank you all.