This was originally published in the Orlando Sentinel
by Mitt Romney
April 15, 2011
There’s some good news and some bad news as we mark the unhappy occasion of the April 18 tax filing deadline. Let’s start with the good news.
For the first time in the post-World War II era, there is a significant popular movement to scale back government and reduce the tax burden that has been stifling our economy. A lot of this is because members of the Tea Party are making their voices heard.
Almost 21/2 centuries after the original Boston Tea Party of 1773, the idea of limited government that inspired our forebears is very much alive. The growth of government is not some inexorable force. In a democracy, we the people decide. Thanks to the Tea Party, there’s real hope that we can rein in our profligate federal government.
But in order to make progress, we have to first rein in President Obama, whose spending binge is driving our national debt to historic highs. When Obama took office in 2009, the national debt was about 50 percent of the Gross Domestic Product. Over the past two years, our national debt has risen to about 70 percent of the GDP and is expected to be 100 percent of the GDP by 2020.
The Obama administration’s $800 billion stimulus package is one-half of the unfolding disaster. The other half is Obamacare, which will cost more than a trillion dollars unless it can be repealed — something the next president must make a priority on Day 1 in office.
These staggering new burdens are made worse by the fact that our system of taxation is killing our nation’s once-strong economic engine. The mind-boggling complexity of our tax system is only part of the problem. As of last year, the U.S. tax code had mushroomed into 71,684 pages that no one human being can fully understand. Along with complexity comes a dizzying array of perverse incentives.
For example, we tax companies that make money overseas if they want to bring the money home, but we don’t tax them if they keep it abroad. The result is that as much as a trillion dollars in private capital is parked offshore. With proper incentives, that money would be infused into our economy and invested in new equipment and factories. Repatriating a trillion dollars could create lots of good, permanent, private-sector jobs.
Then there are the disincentives that flow from the high rates themselves, for entrepreneurs, small business owners and other job-creators. American employers bear the highest tax burden in the world, tied with Japan and above even European countries like Italy and France. But instead of making ourselves more competitive by reducing rates across the board, we’ve created myriad loopholes that are confusing to everyone except the lawyers, accountants and lobbyists who make a living off them.
We have also built a paralyzing uncertainty into our system. In December, Congress and President Obama agreed to temporarily extend the Bush tax cuts. But under the terms of the congressional compromise with the White House, high rates will come back into force in two years unless Congress acts again. Every entrepreneur, every small business owner and every employer knows that the clock is ticking. This uncertainty translates directly into caution about investing and taking on additional workers.
A smart tax system would reward investment, savings and entrepreneurship, while providing job-creators with the predictability and stability they need to grow our economy. But our tax system is not smart; it’s quite the opposite. It needs urgent reform that reduces rates and restores a climate of confidence in our economy. With millions of Americans seeking but not finding work, a transformation of our approach to taxes is both an economic and moral imperative.
But reform requires both understanding and leadership. Unfortunately, when it comes to those qualities, we are facing Washington’s biggest deficit of all.