On behalf of National Taxpayers Union and our members across the country, we respectfully submit the following recommendations as you work toward completion of a conference report on H.R. 1, the Tax Cuts and Jobs Act. We greatly appreciate your efforts to create a simpler, fairer tax code. Overhauling our outdated tax system is the most effective way policymakers can get the American economy moving again. It is crucial that the conference report maximize the pro-growth effects of tax reform - we hope you will find these recommendations helpful during this critical endeavor.
Reduce the corporate income tax rate to 20 percent. The majority of economic growth in the House and Senate bills is generated by bringing the corporate tax rate down to a more competitive 20 percent. We urge you to hold firm at this rate.
Maximize cost recovery provisions. Greater incentives for capital investments will yield immediate economic growth. Conferees should move as close to full, immediate expensing as possible.
Eliminate the alternative minimum tax. The AMT creates undue complexity for families and businesses. Preserving this tax on individuals and corporations could greatly diminish the economic benefits of other components of the bill.
Fully repeal the estate tax. Not only is the estate or “death” tax unfair, it is also economically destructive. It brings in minimal revenue to the federal government, but is responsible for the destruction of $1.1 trillion in capital, according to the Joint Economic Committee. The Tax Foundation estimates that repealing this tax would create 150,000 jobs.
Place reasonable limitations on interest deductibility. Limitations on the deductibility of interest should be implemented in a manner that does not substantially increase the cost of capital or place American businesses at a disadvantage relative to foreign competitors.
Avoid “gimmicky” revenue raisers. Changes like mandating first-in-first out (FIFO) tax calculation rules for security sales or imposing protectionist double-taxes that discriminate against affiliate reinsurance transactions, might appear to be attractive options for bringing in additional revenue, but they could undermine the economic health of important sectors of business while increasing complexity.
Prioritize simplification. We remain highly supportive of the principle expressed in both the House and Senate bills that tax reform must provide simplification. We understand the necessity to craft legislation with the broadest possible support, yet we would remind Conferees that restoring or augmenting large personal income tax deductions, at the expense of lower rates or a larger standard deduction, will reintroduce unwelcome distortions and undermine the goal of simplification. Both of these factors can be a detriment to the common goal of delivering the benefits of economic growth to all Americans.
Thank you for considering these recommendations. We hope to work with you and your colleagues in finally delivering long-overdue tax reform and tax relief to hard-working Americans.