House Speaker Paul Ryan told officials at a Harley-Davidson motorcycle factory in Menomonee Falls last week that Congress is moving “full throttle on tax reform.”
Good. America needs a simpler tax code with lower rates and fewer loopholes to stay competitive in the global economy.
But Ryan, R-Janesville, also is hedging on his pledge not to run up the federal deficit in the process.
The federal tax code has become a convoluted mess that’s inefficient and expensive to comply with. It includes a high corporate tax rate of 35 percent, and far too many ways for clever tax attorneys to help their wealthy clients avoid paying any taxes at all.
Even former Democratic President Barack Obama said the corporate tax rate has to come down. And like Ryan, he and other Democrats have favored a simpler system.
So Congress should be able to rewrite and streamline the tax code with bipartisan input and cooperation.
That’s how sweeping tax reform was last accomplished more than three decades ago. Republican President Ronald Reagan worked with Democrats in Congress to reach a deal in 1986.
Key to that historic agreement was keeping tax reform revenue neutral, meaning lower rates were offset by the repeal of subsidies and loopholes, among other changes.
Speaker Ryan had touted a similar goal — until hedging this month during an interview with the Associated Press. Ryan repeatedly refused to confirm that the tax reform plan he’s helping draft will not add to the nation’s annual deficit, which is approaching $700 billion.
“We want pro-growth tax reform that will get the economy going, that will get people back to work, that will give middle-income taxpayers a tax cut and that will put American businesses in a better competitive playing field so that we can keep American businesses in America,” Ryan said.
All that sounds good. But the speaker quickly added: “That is more important than anything else.”
No, it’s not — if by “anything else” Ryan means further running up America’s debt, which topped $20 trillion this month and is projected to increase $10 trillion over the next decade.
Ryan’s comments, according to the AP, signaled “possible retreat on a core GOP commitment” not to add to the ballooning federal deficit. We hope that’s not the case. Yet top Republicans on a key Senate panel last week tentatively agreed to a tax cut that would add $1.5 trillion to the debt over the next decade, according to the AP.
Ryan and other top leaders are expected to unveil details of their tax plan this week. They’re sure to contend that rate cuts will stimulate the economy and bring in more revenue. But banking on a big tax cut to magically pay for itself would be a huge risk. Lawmakers should rely on the analysis of the nonpartisan Congressional Budget Office instead.
U.S. Sen. Bob Corker, R-Tenn., calls federal debt a greater threat to our nation than North Korea, Russia or the Islamic State.
Ryan and the rest of Wisconsin’s congressional delegation should insist that meaningful tax reform move forward in a fiscally responsible way.