The American people have had a rough time over the past few years. Fifty percent of Americans consider themselves to be living paycheck to paycheck, while almost a third of voters say they are just $400 dollars away from a financial crisis. That’s not acceptable. Fortunately, there are things we can do about it, starting with comprehensive tax reform.
Comprehensive tax reform is perhaps the single most important thing we can do to provide financial relief to American families and get our economy back on the path to long-term health. That’s why Republicans in Congress have spent several months working with the Trump administration on a tax reform framework that we believe will lead to more jobs, fairer taxes, and bigger paychecks, and why the tax-writing committees in the Senate and the House of Representatives are currently hard at work drafting legislation.
Our tax reform framework prioritizes tax relief for the middle class by ensuring working families receive a much-needed increase in take-home pay. To start with, our plan will lower income-tax rates for hardworking families around the country. We will also double the standard deduction to $12,000 for single filers and $24,000 for married couples who file jointly. While all Americans will benefit from this provision, it will particularly benefit the low-income families who need help the most. Under our tax plan, a family making $24,000 or less per year will not have to pay a dime in federal income taxes.
There is no denying that raising a family in the United States is getting more and more expensive. That’s why we will also help working families by increasing the size of the child tax credit. This will free up money that families can use for anything from dentist bills to college savings. And for low-income families who won’t pay income tax under our plan, up to $1,000 of this new, larger child tax credit will be refundable.
In addition to direct relief for working families, our tax plan will also provide for the kind of economic growth needed to give hardworking Americans access to new jobs and opportunities and increase their take-home pay. To start with, our plan will lower tax rates for small businesses and family farms and ranches.
Small and medium-size businesses are an important engine of economic growth, but our tax code makes things more difficult for these job creators by saddling them with high tax rates — at times even exceeding those paid by some large corporations. By lowering tax rates for these businesses, we can help them reinvest more of their earnings into their operations. The Republican tax plan will also allow small and medium-size businesses to recover their costs more quickly, which will also help free up money they can use to grow their business and create new jobs. This is good news for the American worker.
But there’s more that we can do to increase wages, jobs, and economic growth. One key thing we can do is address our high corporate tax rate, which is reducing opportunities for American workers and sending American jobs overseas. Right now, our corporate tax rate is the highest in the industrialized world at 35 percent. Our main foreign competitors pay an average rate of 22.5 percent. That puts American companies at a major disadvantage in the global marketplace, which in turn hurts American workers. Companies struggling to compete with their foreign counterparts don’t have a lot of extra money to invest in things like new jobs and boosting wages.
Plus, our uncompetitive tax rate has driven too many companies to move their headquarters and jobs overseas, which means further loss of opportunity for American workers. Lowering the corporate tax rate will help American businesses compete in the global economy, which will in turn help increase jobs, wages, and opportunities for hardworking Americans here at home. According to a recent analysis by the President’s Council of Economic Advisers, lowering the corporate tax rate from 35 percent to 20 percent would increase average household income in this country by an estimated $4,000 per year.
Another way we can help keep American businesses competitive globally is by reforming our outdated worldwide tax system. Right now, American companies pay taxes to foreign governments on the money they make abroad, and are then taxed again on part of those profits — again, at the highest tax rate in the industrialized world — when they bring that money back home to the United States. It’s no surprise that this discourages businesses from bringing their profits back home to invest in new jobs and increased wages.
Our tax plan addresses this problem by moving our country from a worldwide tax system to a territorial tax system, the kind of tax system now employed by most of our foreign competitors. This move, which has bipartisan support, would eliminate the double taxation companies currently face and encourage them to bring the profits they make overseas back to the United States to invest in American workers.
Americans have spent too much of the past decade struggling with high taxes, stagnant wages, and a lack of opportunity. It’s time to give them relief. Right now, we have a unique opportunity to implement pro-growth tax reform policies that will provide more jobs, fairer taxes, and bigger paychecks for hardworking individuals and families across the country. As we move through the legislative process, I will continue to work with President Trump, my fellow members of the Senate Finance Committee, and leadership in the House to ensure that comprehensive tax reform makes it to the president’s desk for his signature.