HCA/ASCE joint meeting featuring guest speaker, Congressman Kevin Brady.
Monday, September 19, 2016
Posted by: Jeff Nielsen
August 2016 Cover Story
HCA/ASCE joint meeting featuring guest speaker, Congressman Kevin Brady.
The Houston Contractors Association was proud to welcome U.S. Congressman Kevin Brady as the guest speaker for our annual joint luncheon with the American Society of Civil Engineers (ASCE). Congressman Brady’s presentation focused mainly upon taxes and how to grow the U.S. economy. He opened up his comments by telling the audience that he needs their advice and counsel on a proposal to change the way we tax in America. Brady stated that back in January under the new Speaker of the House, Paul Ryan, the Republicans decided that they would identify six of the more challenging issues facing America. The goal was to develop a list of detailed and credible solutions for those problems, run on those solutions and, if the voters saw fit to elect them, implement those solutions into law. The topics covered national security, the war on terror, restoring the checks and balances of the constitution, regulations, reforming welfare, replacing the Affordable Care Act and tax reform. As Chairman for the House Ways & Means Committee, if fell to Congressman Brady to review three of those topics; reforming welfare, replacing the Affordable Care Act and the tax reform task force.
Congressman Brady stated that he wanted to tell the audience what they were proposing as a new tax code for America and asked for their feedback. He stated that America does not have to settle for this disappointing, slow economy that we currently have. Projections continue to show that there will be less than two percent growth in the economy going forward. There are millions of Americans that qualify, but cannot find fulltime work. A family of four has effectively not seen a pay raise in the last ten years. America has a hole in its economy that is the size of Canada’s economy and we don’t have to settle for that. The current tax code is a big part of the reason that American companies are relocating to other countries.
Congressman Brady stated that when he started the review of the tax code he set out two goals; build a tax code that is built for growth, and leapfrog America from dead last amongst our global competitors back into the lead pack. Congressman Brady stated that he is planning on bringing this proposal to a vote in the first half of 2017. “For the first time in 30 years we are going to have a serious discussion about how we are taxed and about how our economy grows.” said Brady.
There are three major reforms that he is proposing to the voters: 1. We go all in for growth on businesses by proposing the lowest tax rates on businesses in modern history. 2. We go all in on for simplicity for families by proposing a code that is so fair and so simple that 95% of Americans can file on a postcard. 3. Bust up the IRS and make it work for us.
Looking at the first reform, the plan is to cut the business tax rate by nearly half for all size businesses, corporations and family owned businesses, down to 20% from a high of 35%. For other businesses such as partnerships or LLC’s Brady proposes and equal tax cut of 43% taking the tax rate down to 25% from 44%. This would lower the rates to those before the great depression. The principle, according to Brady, is to have the money remain local and grow the local economy versus being sent to Washington to grow the federal government.
The point here is to create main street jobs. The best way to grow main street jobs is to encourage business investment. When businesses buy new buildings, new software, new technology invariably jobs grow. Brady stated that they are proposing for the first time ever, that businesses be allowed to write off 100% of all of their business investments, with no limits, in the year that they have been made and not spread them out over multiple years. Brady stated that this may be the most pro-growth part of the blueprint that they are proposing.
Congressman Brady went on to say that U.S. companies not only compete at home, but compete in the global market as well. They are competing, however at a disadvantage. We are one of the few countries that tax our companies here at home, we tax them abroad and then we tax them to bring profits home to reinvest in the United States. The U.S. creates a barrier for companies that earn a profit overseas from bringing that profit home and reinvesting it in jobs, manufacturing and research. So in return, those companies make those investments in other countries instead of bringing it home to the U.S. Brady is proposing to change that, so that U.S. companies are only taxed at home and not overseas and with a zero reinvestment tax. Brady stated that there is over $2 trillion of stranded American profits overseas waiting to get back to America. It makes no sense to lock that out and we propose to change that.
Congressman Brady went on to say that made in America products are at a disadvantage, both here and around the world because we are one of the few countries that taxes its own exports and we don’t tax imports. Other countries are just the opposite and as a result made in America products are at a price disadvantage both at home and abroad. Brady’s blueprint proposes to end this practice of taxing our exports and impose an import tax on foreign goods. This change has several positive implications, but the most significant is it will eliminate the incentive for a company to move their headquarters, manufacturing or research overseas. Brady stated that their goal is not only to stem the tide of companies leaving the U.S. it’s to bring them back to America.
Brady also stated that part of this blueprint is to permanently eliminate the estate tax, better known as the death tax. Created in 1916, it is the most un-American tax that we have, said Brady, it allows the federal government to take half of what you have built up over your life, upon your passing. This is the number one reason that family owned farms and businesses are not handed down to the kids and grandkids.
Congressman Brady said that a recent review of the plan by the Tax Foundation, a nationally known, independent tax group estimated that if all aspects of the plan are implemented, it will grow the U.S. economy by 9%. It would also grow wages by the same amount at almost every income level and move the U.S. back into the leadership pack. According to Brady the tax code has tripled in size since it was last reformed by President Ronald Reagan 30 years ago. It is now 70,000 pages long and there have been 4,000 changes to the tax code within the last decade alone, equaling one new tax law every day. “It is ten times the size of the bible with none of the good news.” said Brady. The proposal that the blueprint is proposing is so simple that almost everyone could file their taxes in a postcard form. Brady stated that the first thing this proposal would do is to flatten the tax code from seven income brackets down to three and lower the tax rates within those brackets. The proposed rates would be 33% on the top earners, 25% for the middle bracket and 12% for the bottom bracket. He also proposed to simplify the standard deduction and make it bigger. Next Brady stated that the proposal is to lower the rates for savings and investments by half of the current rates in order to promote saving and investing by individuals.
Finally Brady noted that when you have a fair and simple tax code, it demands a fair and simple tax collector. The IRS has grown today to a remarkable size and has the power to destroy families and businesses. Here lately the IRS has targeted certain groups because of their political affiliation. Brady’s proposal includes breaking the IRS up into three different pieces and making it work for you not against you. There would be a business unit staffed with tax experts on businesses both international and local. A family unit that will focus on customer service and a small claims court unit that will be independent of the Treasury Department and the IRS and designed to make disputes with the IRS fair without breaking the bank.