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Honorable Mark Sanford

Representing the 1st District of South Carolina

Three Thoughts on Tax Reform...

Sep 28, 2017
Blog Post
It’s very rare that Congress will leave the Hill when in session. But we did that today, as we loaded up in buses at 8:30 am and went to the National Defense University for a summit on tax reform that lasted until 2:00 pm.

It’s an indicator of how important this issue is and the degree to which the House, Senate, and White House have driven a stake in the ground on moving this issue this fall. 

We had a lot of Member discussion and a lot of back and forth about the conceptual plan that was rolled out by Congress and then spoken on by the president this afternoon. From this starting point, I’m sure that I’ll have a lot of conversations with you on what you like or don’t like in what’s proposed.

Make no mistake, this will be a huge debate. 

Healthcare affects about one-fifth of the economy, the tax code affects 100% of the economy...and our economy disproportionately affects the world economy at large. Given the magnitude of what’s in play here, it will be very important that I get your feedback throughout this process. 

At the concept level, there are a couple of major principles at play….

One, tax relief and simplification for working middle class families. If you look at the way wages have stagnated over the last twenty years, it is these folks that need help the most. Furthermore, lobbyists and special interests have carved out a whole host of tax loopholes that do injustice to the concept of fairness and, by their exemption, raise the tax load for the rest of us.

Two, a simpler tax code that promotes competitiveness and job growth. What was talked about would amount to as much as a 40% cut in tax rate for small businesses, as the rate would go from about 40 to 25%. Small businesses are the backbone to job creation in our country, and I believe that help here is important.

Three, a simpler tax code that globally makes us more competitive - and again helps with job growth. We presently have a global system in the way that we tax corporate profits overseas. Our competitors have a territorial tax system that exempts foreign earnings from being taxed twice, and there was much discussion about the way that this leads to corporations moving operations overseas and the way in which that hurts us in the U.S.

The devil will be in the details going forward on what these changes would mean for the deficit, how we collapse to 3 or 4 rates, what a “zero bracket” would look like, what ending the alternative minimum tax or the estate tax will mean next...but all those are details for another post.

Based on what you read over the days ahead and what you heard from the press conference today by the House and Senate and the president, I’d be curious to hear your thoughts on what you think should come next.