COFFMAN: What tax reform would mean for our community
Author: Mike Coffman - October 26, 2017 - Updated: October 26, 2017
We’ve all seen the headlines about the effort to fundamentally overhaul and simplify our nation’s tax code. This long-overdue effort is one of the most important developments in Congress this year. We have not overhauled our tax code since 1986 because changing the tax code impacts everyone, which makes large changes difficult. However, much has changed since 1986. If we want a tax code that is fair, broadens our nation’s tax base and encourages rather than discourages economic growth, jobs and higher wages, we need to roll up our sleeves and take on this important challenge.
To me, this process starts by asking the question of what tax reform will mean for our Colorado communities in areas like Aurora, Highlands Ranch and Littleton. This is an essential question, and I think the answer is two-fold.
I believe tax reform must first provide employment incentives for small locally-owned businesses that employ so many of our neighbors and are the backbone of our communities. Secondly, tax reform must also provide tax relief for the hard working middle class.
As a former small-business owner myself, I understand the challenges small businesses face, and particularly how onerously high the income tax rate is that many small business owners pay. Under the current tax system, most small business owners “pass through” the profits of their business as personal taxable income. If the business is reasonably profitable, those business profits are often taxed at the highest individual marginal tax rate, which when combined with local and state taxes can exceed 40 percent. Capping these small business rates at 25 percent would provide small businesses with an even playing field with their corporate competitors, while also strengthening our local economy.
For the middle class, I expect the package to include a doubling of the standard deduction, meaning far fewer people will need to itemize to file their taxes, which often translates to lowering their tax rate. I also hope the bill will include a generous child care tax credit to relieve some of the pressure on families with two working parents.
Many experts believe that we can accomplish all of these reforms while simplifying the process enough to fill out your yearly tax return on the back of a postcard. In short, we want more Americans to keep their hard-earned dollars to spend as they see fit.
Congress has a special opportunity right now to deliver real tax reform for small businesses and working families. If we let this window close, it would be a tremendous mistake. It is crucial that members of both parties work together to take advantage of this moment and deliver a new tax code that reinforces the foundation of our economy by empowering small businesses, and that takes into account the needs of hard-working middle-class Americans.
I will do everything in my power to see this effort succeed, and I invite all Coloradans to join me to help make a new pro-growth, fair and simple tax code a reality.