Congress can pass Tax Reform 2.0 and make tax relief permanent
Tax Cuts and Jobs Act has helped the economy thrive and put more money back into the pockets of hard-working Americans. Congress has an opportunity to make those tax cuts permanent, providing relief to individual taxpayers and confidence to job creators.
The root problem is not low taxes. After all, the IRS collected record revenue in fiscal year 2018. The problem is excessive government spending, and no amount of tax increases can fix that.
Without restraining spending, further tax cuts today will only mean higher taxes in the future. To achieve fiscal sanity while respecting individual liberty, Congress should pursue tax reform 2.0 by eliminating tax credit spending in the tax code and reducing federal spending.
The Heritage Foundation’s Blueprint for Balance shows how this can be done. The blueprint would achieve an extra $735 billion in additional tax revenues by eliminating narrowly targeted and inappropriate tax credits, or disguised spending, in the tax code.
Getting rid of these credits would more than cover the estimated $657 billion drop in revenues over 10 years that would result from Tax Reform 2.0. Other measures would also help with this, like fully eliminating the state and local tax deduction so that people earning the same incomes across America pay the same in federal taxes.
The state and local tax deduction is deeply inefficient, as it mainly benefits the wealthy and does little for the poor. It also encourages fiscal mismanagement by subsidizing state and local tax increases and discouraging tax cuts.
Replacing this deduction and other narrow and inefficient tax credits with broad-based, pro-growth measures contained in Tax Reform 2.0 would achieve all the benefits of tax cuts without incurring the consequences and risks of higher debt.
Republicans in Congress have a responsibility to their constituents and to their country. Trimming the fat on government spending and making tax cuts permanent will effectively keep our economy growing and make America great again.