Tax bill will strengthen US economy

Congress is now in the final wrestling match stage of creating a $1.5 trillion tax reform package. House and Senate Republicans must resolve differences in their bills in order to hand completed legislation to President Donald Trump.

Good tax reform should make a complex economy more efficient and ultimately put money in people’s pockets. Some tax deals go heavy on benefiting individuals. This legislation does some of that. But the larger opportunity is on the business side, providing relief and investment incentives to employers. Therefore, our focus is on whether this bill helps Americans become more prosperous by spurring job and wage growth. We believe this tax reform bill will strengthen the American economy and create wealth, so we support passage.

This time Democrats stand in opposition as, for example, Republicans stood against Obamacare. Still, the country is weighing an epochal change to the economy, making this “an incredibly significant time in our public life,” U.S. Rep. Peter Roskam, one of the Republican tax reform leaders, tells us.

Any vote against this bill is a vote to maintain America as it looks today. Discard the impact of the stock market boom fattening your 401(k) since Trump’s election, because that’s due in part to anticipation of tax reform. Kill tax reform and you lose market momentum.

What you’re left with is what this nation has had: growth around 2 percent or less a year. That’s not fast enough to boost stagnant wages, increase the job participation rate or improve U.S. competitiveness vs. other countries. Passing this tax reform should get the economy to steady 3 percent growth.

The tax bill helps employers by lowering the top U.S. corporate tax rate from 35 percent to about 20 percent. The bill also takes a big step to encourage companies to repatriate more than $2 trillion in profits that are parked overseas to avoid that 35 percent rate. Companies would get a chance to bring cash home at a one-time rate of about 14 percent. Companies would invest to grow. Without those changes, U.S. companies are more likely to move out of the country or be acquired by foreign entities.

Another provision encourages companies to buy more equipment by allowing them to immediately and fully expense the cost. Business investment is a big deal because, with a lower marginal tax rate, businesses can spend big to improve or expand their operations.

Our major concern with this bill is the cost. This plan may cost the government $1.5 trillion over a decade in which the Congressional Budget Office expects Washington to collect $43 trillion in revenue if the economy continues on its current, slow-growth trajectory. If economic growth rises to about 2.5 percent annually, this package could pay for itself. If it doesn’t, the nation’s $20 trillion debt would rise accordingly.

One thing we hope that faster growth buys us all is a new national discussion about how to curtail spending and reduce the debt. Eventually, revenue and expenditure need to come into alignment.