Last week, S.2320, a bill that would create Universal Savings Accounts in the federal tax code, was referred to the Senate Finance Committee. The bill, sponsored by Senator Jeff Flake and Representative Dave Brat, would...
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- Tax Reform’s Honorable, Yet Vague, Mention in the Inaug...
Tax Reform’s Honorable, Yet Vague, Mention in the Inaugural Address
Inaugural addresses are not known for their in-depth policy discussions and Monday afternoon’s was no different. However, Obama did mention—without going into any detail—the need to “revamp our tax code.” It left a lot to be desired for those looking for a few specifics from the president dealing with tax reform.
To be fair, tax policy is not a very popular subject at an inauguration. For a little historical perspective, according to transcripts of presidential inaugural addresses, the word “tax,” or any variation of the word, has only been mentioned around fifty times since George Washington. The president that mentioned the word the most—ten times, or 20% of all inaugural mentions—was Ronald Reagan. The last time the word "tax" was explicitly mentioned in an inaugural address was in 2001 by George W. Bush as he was outlining his plan to cut taxes. It is not out of the ordinary to gloss over details of tax reform, or not mention it at all, during an inauguration speech. So it is interesting that he took the time to mention it at all.
Today it still remains to be seen what President Obama envisions as a revamped tax code. One hopes he takes into consideration his own words from 2011: “We have a burdensome corporate tax code with one of the highest tax rates in the world.” He was absolutely correct then, but the situation is actually even worse today. Now that Japan has lowered their corporate rate from 40.69% to 38.01%, America has the highest statutory tax rate in the world, falling even further behind. America’s high corporate tax rate costs the U.S. economy greatly. Countless studies have shown that higher corporate tax rates reduce economic growth, lower wages, increase prices for consumers, and harm U.S. competitiveness. The U.S. government needs to get serious about its high corporate tax rate if it wants to see sustained economic growth and a simpler tax system.
There are many beneficial ways to reform the tax code to be simpler and more conducive to economic growth, but cutting the corporate income tax seems like the best place to start.
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