Ernst: Tax reform would provide much-needed relief and opportunity for Iowans

It has been more than 30 years since the last time the United States comprehensively reformed our tax system. In that time, the length of the tax code has doubled to 2.4 million words — the equivalent of reading "Harry Potter and the Sorcerer’s Stone" 31 times.

While navigating the complex tax code is nowhere near as fun as reading about a Quidditch match, it is often a necessity for hardworking taxpayers who simply want to pay their income taxes on time.

The frustrating reality is that Americans spend approximately 8.9 billion hours a year filing taxes. But perhaps more remarkable is the hefty price tag that Americans face when it comes to filing taxes, totaling almost $99 billion a year.

Our tax code is not only a complicated headache for families and individuals — it also puts American businesses at a disadvantage. At 35 percent, our tax rate on larger businesses is the highest in the developed world. Meanwhile, small businesses, which make up 97 percent of employers in Iowa, are seeing taxes reach as high as almost 45 percent! These are hardly incentives for businesses of all sizes to move to or remain in the U.S.

In the years that followed the worst economic recession since the Great Depression, our economy underachieved, and our outdated tax system certainly did not help. On average, the U.S. economy grew by just 1 or 2 percent annually in prior years. This has left many middle- and low-income households struggling to make ends meet. Since the end of the recession, middle-class folks around Iowa have seen stagnant wages while their bills have become more expensive and health care costs have skyrocketed.

With a pro-business president in the White House, we are seeing a return to policies that let the American market do what it does best, for its long overdue that the federal government get out of the business of trying to fix the economy. In fact, economists estimate that lowering the tax rate on job creators of all sizes would foster long-term economic growth, which would boost incomes for the average household by thousands of dollars.

By streamlining our cumbersome tax system and eliminating loopholes that primarily benefit the wealthy, Congress has an opportunity to lower tax rates for middle- and low-income Iowans and dramatically decrease the amount folks are taxed. Despite what you might read or hear, the Senate proposal would not cut Medicare, Medicaid, mortgage interest deductions, or student loans, just to name a few. The non-partisan Joint Committee on Taxation found that the Senate legislation — on average — would provide every income group with tax relief.

Likewise, by creating a more competitive tax system for businesses, we can foster greater growth and investment in the United States while boosting wages and job opportunities for hardworking Iowans. The Tax Foundation estimates that the plan would create over 10,000 jobs in Iowa and a middle-income family in Iowa would see roughly $2,600 more in their paycheck annually.

Additionally, I am thrilled that bipartisan legislation that I helped lead, known as the Investing in Opportunity Act, has been included in the Senate tax reform plan. This provision builds on efforts for much-needed tax relief for low and middle-income earners. By incentivizing private investment in struggling communities, it would spur economic growth in poverty-stricken areas, bringing hope and opportunity back to many distressed rural communities in Iowa and across the country.

I believe Congress would also be remiss if we do not lead by example and offer up our own unnecessary tax break. That is why I introduced the Stop Questionable, Unnecessary, and Excessive Allowances for Legislators (SQUEAL) Act, which would eliminate a provision of the tax code that allows members of Congress to deduct, for income tax purposes, up to $3,000 annually in living expenses while in the Washington, D.C., area. As we seek to achieve the ultimate goal of lowering rates for hardworking families and small businesses, Congress should start by eliminating handouts to politicians.

It is long overdue for our country to pursue a simpler tax code that provides much-needed relief for hardworking Iowans that puts our economy back on track. In the coming weeks, I look forward to continuing to hear input from Iowans on tax reform, and working with my colleagues on a path forward that reduces the burden our complicated tax system places on our families, individuals, and small businesses and instead creates more opportunities for all.

Joni Ernst is a U.S. senator from Red Oak.

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