Tax Reform

America is the global leader in technology, energy, finance, and innovation. Yet, our obsolete tax
code—one that has not been reformed in 30 years—inhibits our true economic potential and
constrains opportunities for all Americans.

By failing to overhaul our tax system, the U.S. has fallen drastically behind. Over the last three
decades, the average corporate income tax rate among the now 35 countries in the Organisation
for Economic Co-operation and Development (OECD) has fallen from 48% to under 25%. Since
2000, we are one of only three OECD countries that have NOT cut their corporate tax rate. Now
with the highest corporate tax rate in the industrialized world, it’s no wonder U.S.-based
businesses hold back on domestic investment and hiring plans. We need a tax platform that
fosters growth, encourages investment, and ensures a level playing field.

Who bears the burden of our high corporate tax rate? It does NOT fall on corporations; it falls on
PEOPLE. In other words, “companies don’t just pay corporate taxes out of their own pockets. They
pass it along in the form of lower wages and benefits to the work force, higher prices for
consumers and lower stock valuations for investors. One key reason why average wage earners
have had virtually no pay increases in the past 15 years is the high corporate tax rate. That is why
so many Americans are so angry at Washington – They want BIG change.”

We can’t settle for middle of the pack. The Simplifying America’s Tax System (SATS) plan delivers
that big change.

On the business side, this pro-growth plan will repeal the corporate income tax and replace it with
a single-digit tax on business activities, subjecting all business income to one level of income
taxation. This credit-invoice based consumption tax is not an untested economic experiment;
rather, every other OECD country institutes a similar charge on goods and services. But
importantly, no other OECD country has eliminated its corporate income tax; thus, with only a
single-digit consumption tax, SATS will make the U.S. the most competitive tax system in the
world. And, since all businesses will have the option to be treated as a corporation for tax
purposes, SATS ensures a level playing field by not picking winners and losers.

On the individual side, SATS will reduce income tax rates for all taxpayers. It will also simplify the
tax code by significantly increasing the standard deduction; a family of four will have no income
tax liability on income up to $50,000. SATS will also eliminate the marriage penalty and expand
the Earned Income Tax Credit. Even accounting for the impact of the consumption tax, low-to-middle
income households will see an after-tax increase in income similar to higher income
households.

These are big, bold ideas. While some may say that such a plan is too far outside the mainstream
to be politically viable, “we are at the point where we need an overhaul, not an oil change.” SATS
delivers that much-needed overhaul.

I recognize this overhaul won’t happen overnight. Rather, I view this as the beginning of the
conversation and seek your feedback. Please submit comments and questions to
TaxReform.Renacci@mail.house.gov. I look forward to your ideas to transform America’s tax
code so that it will provide opportunity for all Americans. Your success should be up to you, not
the tax code.

Simplifying America's Tax System two-page summary

Simplifying America's Tax System white paper: