One of the first things President Ronald Reagan accomplished after winning the 1980 Presidential Election was to help pass legislation in 1981 to cut federal tax rates. President Reagan later said cutting taxes was a priority because, “The whole thing could be boiled down to a few words—freedom, freedom, and more freedom.”
I commend President Trump for focusing on tax reform as the most important part of his domestic agenda. It has been more than a generation since we had meaningful tax reform in this country. Since the beginning of this year, the President began talking about tax reform. President Trump has been working with Congress on tax reform and the work of our own Illinois Congressman Peter Roskam has been invaluable in this important process.
Part of President Trump’s fiscal agenda is to lower the corporate tax burden from 35 percent to 20 percent. The United States has one of the highest corporate income tax rates in the world. High tax rates discourage investment and economic growth.
Lowering the corporate tax rate will also have an impact on wages. Alison Felix, an economist at the Federal Reserve Bank of Kansas City, found that, “High rates of corporate taxation reduce corporate investment and thereby depress local wages. “
The current Republican tax reform proposal is about empowering individuals and families. The proposal would double the standard deduction so that the first $12,000 an individual makes or the first $24,000 a married couple makes is tax free. The plan also would simplify the federal tax code by reducing the number of tax brackets to three – 12, 25 and 35 percent. The Republican plan would also cap the small business pass-through tax rate at 25 percent. Many families and small business owners will see a dramatic reduction and simplification of their tax returns if this plan becomes law.
As the debate on tax reform moves forward, there needs to be adequate deductibility for state and local taxes – especially for Illinois taxpayers. According to a 2017 analysis from WalletHub, the combination of local and state taxes makes Illinois the highest taxed state in the country and this report came out before a 32 percent increase in the income tax hike was enacted into law.
Here in Illinois, taxpayers know the punitive nature of taxes. We need tax relief and we need it now.