Hard-working Montana families deserve tax reform

BILLINGS — During the eight years of the Obama Administration the annual growth rate averaged 1.47 percent. To achieve the American Dream and economic prosperity, we need an annual growth rate of 3-3.5 percent. Likewise, during the past ten years, taxes increased, the federal debt has risen to outrageous levels, and government is growing so fast the definition of the word ‘efficiency’ should be changed to “the antithesis of the federal government.” Our tax code is broken, it’s inefficient, and any amount of economic growth that occurs is in spite, rather than because, of our tax system.

President Donald Trump and leaders in the House and Senate are working together on legislation to bring our tax code into the 21st century. Tax reform will ensure America remains standing as the sole economic super power for generations to come. It will increase wages for middle and lower class families and will boost job and wealth creation. American businesses will again be able to compete globally, and companies backed into a corner and forced to send jobs overseas will be free again to hire American workers.

The brightest part of this proposed legislation is the reduction of income taxes for middle class Montanans. The standard deduction for couples is doubled from $12,000 to $24,000 and the tax rate for couples earning up to $90,000 is reduced from 15 percent to 12 percent. This encompasses the vast majority of Montanans. It is evident that leaving more money in families’ pockets is always a good thing for those families. Middle class Montana families will see a reduction in their income taxes. The average Montana family of four will save around $1,500 per year, which under the current system, would have been taxed away by the federal government. Of course, several itemized deductions would be eliminated, but because the standard deduction would double, the government’s strong-arming of Americans’ behavior through the tax code would diminish. Hard-working Montana families are better at deciding what to spend their money on than are bureaucrats in Washington DC.

Under this proposed tax reform legislation, small businesses receive the tax reprieve they need and deserve to better compete against large corporations. There is a common fallacy that big business is opposed to tax increases. This is not necessarily true. Tax increases, while harmful to large corporations, are fatal to small businesses. Large companies are more than happy to pay more in taxes if it means their small competitors go out of business. This increase in market share from reduced competition, more often than not, offsets the costs of increased taxes. The current tax system is the embodiment of back room deals between lobbyists and politicians eager to fill their coffers. If done correctly, tax reform legislation would create an even playing field for small and large businesses.

Currently, the United States has the highest corporate tax rates in the world. These tax rates effectively subsidize foreign companies by artificially raising the costs of American goods and services, which are ultimately passed on to consumers. In the same way tariffs raise the costs of foreign goods, businesses subject to U.S. corporate tax rates — which are substantially higher than our global counterparts — operates as a tariff on domestic goods, similarly raising costs and putting U.S. businesses at a disadvantage. Make no mistake, middle and lower class families are footing the bill for these outrageously high corporate taxes every time they make a purchase.

While this bill is far from finished and not perfect, it is a step in the right direction. Last year, taxpayers handed over nearly three trillion dollars to the federal government, only to see politicians turn their nose and demand more. It’s time for Washington D.C. to live within its means, heed the words of John Kennedy and Ronald Reagan, and give Americans the tax breaks they need to get the economy back on track.

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Russ Fagg of Billings is a Republican candidate for the U.S. Senate.