Las Vegas Review-Journal (Sunday)
Tax plan benefits tech — and America
THE last time our country implemented substantive tax reform was 1986, the same year Tom Cruise starred in “Top Gun,” a gallon of gas cost 89 cents and people welcomed Fox Broadcasting into their living rooms for the first time.
Our economy has changed dramatically with the introduction of consumer technology over the past three decades. We need a tax code that reflects and supports that shift. Fortunately, President Donald Trump’s comprehensive tax reform plan is well-positioned to do just that.
At a recent rally in Harrisburg, Pa., Trump acknowledged these problems in our tax code and pledged to pass a plan that will benefit citizens, companies and consumers alike: “Our country, and our economy, cannot take off like they should, unless we transform America’s outdated, complex and extremely burdensome tax code. … That is why we’ve proposed tax cuts that are pro-growth, pro- jobs, pro-worker, pro-family and pro-American.”
Trump’s plan introduces a flat corporate tax rate of 20 percent. It’s a bold move — our corporate tax rate is the highest in the developed world — but will benefit our economy and bolster the job market. Our current system crushes small businesses and discourages tech startups, who are unable to afford high-priced lawyers trained to pick through the tax code for loopholes. It also penalizes employees: The Congressional Budget Office estimates workers wind up paying 70 percent of corporate taxes.
A flat rate would give all Americans — at the top and bottom — an opportunity to make their extraordinary ideas a reality and hire other Americans to help them. In 2015, the tech sector employed 8 percent of U.S. workers and created $3.8 trillion in total economic output. And a new report estimates that with the right pro-business policies, startups could create 1 million new jobs annually. When combined with Trump’s plan to cap the marginal tax rate for small businesses at 25 percent, this new plan has the potential to revitalize the job market and reinvigorate local economies.
The 20 percent rate will also allow companies to remain globally competitive. So will a low, single-digit rate for repatriation that can bring back the more than $2.5 trillion now held overseas. This money can be reinvested in America, leading to more job creation here at home.
And Trump’s plan also signals exciting changes for consumers. According to the Tax Foundation, Americans spend $409 billion annually on tax compliance — on top of what they actually pay in taxes.
More, Trump’s plan would reduce the number of tax brackets to three, while removing itemized deductions that the middle class can’t take advantage of. This makes the plan simple enough for most families to do their taxes on one sheet of paper.
A revamped tax structure will help the United States accelerate its global lead in innovation. Other countries are gaining on us. In spite of a crushing regulatory framework, several European countries — most notably France — have increased their investment in disruptive technology and tech startups.
China has been making similar moves. Despite its culture of surveillance, it continues to take a leadership role in tech innovation. At a Brookings Institution event in Washington, D.C., China Vice Premier Liu Yandong discussed China’s 3,500 accelerator programs and millions of STEM graduates.
We still have an edge on both of these regions, driven by our culture of freedom and entrepreneurialism. But dated rules and a crushing tax code weaken our global standing. Adopting Trump’s tax plan, combined with slashing outdated rules, will allow us to take back the global lead in innovation.
We must get behind Trump’s plan — it’s bold, fresh and direct, confronting the problems of our economy head-on and challenging the status quo with its simplicity. This will help us lead our world into the new century, creating new jobs, developing new markets and innovating new technologies.