Coats Tax Reform Plan
America’s fiscal house is on fire and it will take both reductions in government spending and a pro-growth agenda to put out the flames and restore our economy. One way to grow the economy is simplifying and reforming the tax code. Tax simplification will encourage job investment here at home and make our country more competitive in a global market.
Senator Ron Wyden (D-Ore.) and I recently introduced the “Bipartisan Tax Fairness and Simplification Act of 2011.” This legislation will simplify the tax system, hold down rates for individuals and families, provide tax relief to the middle class and create incentives for businesses to grow and invest in the United States. Our legislation will streamline the tangled web of nearly 10,000 exemptions, deductions, credits and other preferences currently cluttering the U.S. tax code to create a simpler and fairer system for American workers and businesses.
The legislation eliminates the Alternative Minimum Tax and reduces the number of individual tax brackets from the current six to three: 15 percent, 25 percent, and 35 percent. Middle-class and low-income taxpayers will benefit from the legislation’s near tripling of the standard tax deduction, which will not only reduce tax bills but relieve Americans of the stress and responsibility of maintaining the records and receipts needed to document itemized deductions. These simplifications alone will make it possible for most taxpayers to file a simple one-page 1040 form that most Americans will be able to fill out in less than an hour. By eliminating tax breaks and loopholes that allow some Americans to pay less than others, the Bipartisan Tax Fairness and Simplification Act is able to hold down rates for everyone. According to the Tax Policy Center, most families making up to $200,000 a year will pay the same or less in taxes under this bill than they do today.
The Bipartisan Tax Fairness and Simplification Act takes steps to level the playing field and make investment in the United States more attractive to businesses of all sizes. To encourage small business growth, more than 95 percent of small businesses – those with gross annual receipts of up to $1 million – will be able to permanently expense all equipment and inventory costs in a single year. This legislation also makes American companies more competitive by reducing the top corporate tax rate and replacing the existing six corporate rates and eight brackets with a single flat rate of 24 percent. Currently, U.S. corporations pay the second highest tax rate among industrialized countries. Under the Bipartisan Tax Fairness and Simplification Act, companies investing in the United States would pay less than they would in Canada, Germany, France and many other U.S. trading partners.