Mr. Chairman, I thank the gentleman for the opportunity to speak a little bit here about the tax reform opportunities that we are seeing now. Some people don't like to admit it, but there is a proven, inescapable correlation among tax…
Mr. Chairman, I thank the gentleman for the opportunity to speak a little bit here about the tax reform opportunities that we are seeing now.
Some people don't like to admit it, but there is a proven, inescapable correlation among tax treatment, capital investment, and job creation. As this chart right here shows, unequivocally correlating an investment of capital with economic change, when you have more money put in, you get more jobs and more economic growth. And some people don't like to admit that connection, but it is inescapable. It has been that way ever since the first commerce took place in the Roman era.
We have a second chart that shows the post-World War II GDP change, an average of 3.1. The American middle class was built on opportunity, lower taxes, economic stimuli, and growth. It wasn't built on this 2.3 to 1.6 that we are going to get if we don't get back to some serious business-centric, investment-centric tax reform.
There is another equally inescapable fact, and that is that capital is fungible. If tax treatment nurtures it, like watering your yard, it will grow. If not, it will be invested somewhere else. Just look at Texas, just look at my home State of Florida, and look at Ireland, for example.
When the tax climate is nurturing and favorable for investment, you get money put in, you get jobs created, you get economic growth. Investment goes where it is most favorably treated. So going to 20 and 25 percent from 35 to 40 percent will unleash a torrent of capital investment and job formation.
Rapid capital recovery by expensing capital assets purchases will attract massive investments, stimulate our economy, make our manufacturing companies do better, and build up the capital stock of our country again, like we used to do. This is going to create one thing: job-creating economic growth.
That is what we need and that is what the Republican reform program offers.
It also offers one more thing and it changes treatment of foreign income, which is something I have some experience in, and it will incentivize companies to keep their income here. That is a good thing for America.
So I might just mention for just a second about what they say and what we say. They say tax cut for the wealthy. No, it is not a tax cut for the wealthy. It lowers taxes on all businesses and middle class Americans.
They say rising brackets on low income. This is an absolute incorrigible falsehood. No. We are taking the 10 percent rate to zero. We are taking the 15 percent rate to 10. By the way, Ronald Reagan reduced the 11 percent rate to zero.
They say it will explode the deficit, but we all know that economic growth shrinks deficits. Ronald Reagan proved that in spades, and we are going to see it again. When we eliminate many of these narrowly-crafted, special interest, lobbyist- driven credits and deductions, we are going to save enough money. Especially when we eliminate the State and local tax deduction, we are going to save a couple of trillion dollars that will help balance this.
Then they say loss of itemized deductions is a bad thing. When we double the standard exemption, no one is going to need to itemize. The people that do itemize, fine, they can have mortgage interest reduction, charitable reduction, whatever. But most Americans are going to be able to pay their taxes on a postcard.
In the polling in this country, the frustration of Americans with the IRS is directly related to the fact that nobody can fill out a tax form anymore. So we have great progress here.
Mr. Chair, I appreciate the opportunity to speak.