LAURENS — An hour before the Senate passed its budget, U.S. Rep. Jeff Duncan detailed the Republican tax reform plan to bypass Democratic votes through the budget to members of the Laurens Tea Party.
Duncan said President Donald Trump asked members of the House Freedom Caucus if they could support a budget with amendments by the Senate to clear a way for tax reform.
“The budget is a vehicle for getting tax reform done — so why would you use a budget to pass a tax reform package? Well, it’s because we don’t have 60 votes in the Senate, and we need 51 votes,” Duncan said.
Typically, in order for the budget to be passed, there needs to be 60 votes in the Senate unless both parties pass the same budget.
Duncan said he believes in a “fair tax” — a tax on spending rather than income — but he said that isn’t going to happen soon.
“What we’re going to get is tax reform by a Republican Congress and a Republican president,” Duncan said. “Drop those rates, make it fair for everybody.”
He said the House is looking at a 12 percent tax rate for individuals, a tiered rate from 12 to 20 percent for higher earning individuals and a 20 percent rate for corporations.
The current top tax rate for corporations, combined with average state and local taxes, is about 39 percent in the U.S.
Duncan said a 20 percent tax rate for corporations would make the U.S. competitive.
“Right now, our tax rate is not even competitive with Canada. So we’re uncompetitive, and because were uncompetitive, we’ve had to create a bunch of loopholes so that the corporations could get these loopholes to lower their effective tax rate to make them competitive,” Duncan said.
Canada’s top corporate tax rate is 26.7 percent. If the U.S. corporate tax rate dropped to 20 percent, it would be the fifth lowest tax rate among advanced economies — on par with Turkey, Iceland, Finland and Estonia.
“Our tax rate isn’t competitive, we can make it competitive, and I think we will by dropping it to 20 percent, doing away with loopholes and making it fair, making it where companies feel like it’s not confiscation, that they’re not penalized for being profitable,” Duncan said.
The Senate passed the $4 trillion budget bill Thursday night — a major step toward bypassing the 60 required votes from the Senate to pass the budget and allowing the Republican Party to add in tax reform on party lines, and possibly without a single Democratic vote during the reconciliation process.
“In reconciliation, when you have that vehicle, we can just do away with the budget and throw it off to the side basically, insert tax reform (and) we’ve got a reconciliation package that only requires 51 votes in the Senate,” Duncan said.
Contact staff writer Ariel Gilreath at 864-943-5644 or follow on Twitter @IJARIELGILREATH.