2017 Brings the Opportunity for Meaningful Tax Reform

As we settle into 2017, there remains a tremendous amount of uncertainty around the Trump Administration’s proposed agenda. But besides the unknown, what this complete overhaul does leave us with is a unique opportunity for Washington to tackle key issues, in a place that has been marked with partisanship and gridlock.

One issue area where this opportunity will hopefully manifest this year is the implementation of meaningful and comprehensive tax reform. America needs a tax code that can more effectively drive economic growth and employment. Thankfully, in an interview shortly after his nomination to be the next Treasury Secretary, Steven Mnuchin said that Americans should expect the "largest tax change since Reagan," with federal tax cuts for average income earners as well as U.S. businesses, indicating that reducing the corporate tax rate to 15 percent will be a major goal for him and the administration.

This is good news as Mnuchin – if confirmed – will have a meaningful impact on the direction of our nation’s tax policy. Regrettably, the Senate Finance Committee missed a recent opportunity during his confirmation hearing to question Mnuchin on a variety of substantive issues on how the Trump administration plans to fix our broken tax system.

As tax reform efforts move forward, Senators should now raise pointed questions to Mnuchin on how he could reverse or address some of the less than business friendly discriminatory tax measures that emanated from the Obama administration. Mnuchin should address how the Obama administration attempted to use the tax code to discriminate against or favor certain economic sectors, and if the Trump administration will continue this trend. Or Mnuchin should go on the record opposing the previous Treasury Department’s regulations under Section 385 of the Internal Revenue Code. These regulations placed onerous costs on everyday business practices on companies that never intended to relocate or “invert” overseas. Senators should ask Mnuchin if he plans to repeal these regulations in light of their intrusion on private markets.

There were a number of opportunities in 2016 to address America’s complex tax code, to no avail. There were attempts by the Obama administration to use a patchwork of solutions that only further complicated the more than 74,608-page-long federal tax code. The Section 385 regulations, intended to address inversions, were one such flawed example.

The nation’s outdated tax code and excess of regulations on American taxpayers and businesses is a serious problem. Honest companies are pilloried with the highest tax rates in the industrialized world at nearly 39 percent (combined federal and state); and consequently burdening America’s business community and deterring new investments.

By prioritizing a serious tax reform measure that will lower rates and simplify the tax code there will be a vehicle to advance economic activity and generate higher employment across the country. Individuals and businesses will also spend less time doing their taxes, a process that has cost billions of dollars and takes away billions of hours from people each year.

Overall, the horizon of 2017 seems encouraging especially with leadership that recognizes the need for a serious change. But it will be difficult after years of partisan divide for both parties to work together to find common ground.

This past June, a viable tax reform blueprint was proposed by House Republicans. Called “A Better Way,” the plan embraces cutting rates and eliminating deductions, and allows full expensing for capital investments. This is all an effort to help jump-start the economy that is burdened by high rates, a complicated filing system, and antiquated regulations. Serving as a starting point for compromise, this plan provides an opportunity for members on both sides of the aisle to work with the new administration to develop a tax code doesn’t stand in the way of the success of America’s businesses.

Lawmakers must be held accountable for the future of the economy and the wellbeing of taxpayers. The time is now to stand behind fresh new faces in Washington who will see important changes are made. Treasury Secretary-nominee Mnuchin’s anticipated leadership at the Treasury Department should prioritize simplifying America’s tax code, reducing tax rates for all American taxpayers, and reversing overreaching regulations such the Section 385 regulations.

Americans are tired of a tax system that brings us down. Hopefully, Mnuchin will reassure any concerns and promote sound tax policy in the new administration. But most of all, it is incumbent on the Trump administration to work with Congress, including members of both parties, to make change a reality.