HURON – Cutting corporate and personal income taxes will get the U.S. economy moving again and enable the government to slowly begin erasing the federal deficit, Sen. Mike Rounds, R-S.D., said Thursday.
But President Trump’s plan, while lauded by congressional Republicans who once derided the Obama administration for adding to the deficit, could add trillions to the nation’s debt over the next decade.
In a conference call, Rounds said while the details over the president’s plan have yet to come, the concept is correct – getting tax rates down so the United States is competitive with other countries.
Trump’s proposal would involve massive cuts to corporate income taxes, reducing the top rate from 35 percent to 15 percent and changing from seven to three categories.
The idea is to try to do something so every family in America gets tax relief, while at the same time simplifying the tax code, Rounds said.
“It really would reduce the paperwork,” he said.
The administration would keep mortgage and charitable tax deduction, while repealing the so-called death tax.
“That would really help a lot of our farm families,” Rounds said. “This would be a positive move forward for them.”
Often, because their assets aren’t liquid, they are forced to borrow money or sell land to pay the federal estate tax, he said.
Members of Congress are beginning to see preliminary details of the tax plan this week. “Doing this is going to be a challenge,” Rounds said, adding that the House and Senate should try.
The government can’t get out of deficit spending until it gets the economy going again, he said.
There is a $1 trillion shortfall added to the debt every year. Regulations cost Americans $1.9 trillion annually, or $500 billion more than they pay in personal income taxes.
Even if the entire defense budget was eliminated, it would still not be enough to balance the budget, Rounds said. Incoming payments don’t equal the amount paid to Social Security, Medicare and Medicaid recipients, he said.
“Going down the same path we’re going down right now will never work,” Rounds said. “We need more economic output to support the debt we’re carrying.
“If we resign ourselves to a 1 percent growth rate we will never catch up,” he said.
Meanwhile, an agreement was reached so the government would be funded through next week in a continuing resolution. Without it, the government would have shut down today.
A continuing resolution is not the way to run the government, but Rounds said he is confident an omnibus bill will pass next week, with changes that are more positive for economic growth.