Column: Stabenow should support tax reform

Klint Kesto

Is our senior senator more beholden to the political party she caucuses with in Washington, D.C., than to the hardworking Michigan voters who sent her there in the first place? It seems that way, given her refusal to support historic, first-in-a-generation comprehensive tax reform to help struggling middle class families and the small businesses that employ them.

Not long ago Sen. Debbie Stabenow vowed to champion reform that “simplifies” the code, “puts more money back into the pockets of hardworking families, helps small businesses, and spurs job creation.” The senator made that declaration at the end of September, barely more than two months ago. What since has changed? In a rebuke to Michigan families, she voted against tax reform that would achieve these very objectives.

Does Stabenow no longer believe Michigan families deserve relief? Is she no longer swayed by the power of small businesses to lift up individuals, support families, and strengthen the communities in which they operate? Would Sen. Stabenow prefer they close their doors and flood the market with jobless Michiganders? Or, would she rather they expand, improve and increase their product offerings, while creating more jobs and ensuring more opportunity?

It’s difficult to believe that Stabenow supports the status quo on taxes. The current U.S. tax code is untenable, probably because it has been more than 30 years since Congress last tackled it in any meaningful way. Today, that tax code is unrelentingly hostile towards enterprise, while the regulatory framework in which it is ensconced has become impenetrably dense and difficult to navigate.

In fact, mere compliance with the federal income tax each year costs the U.S. economy more than $233.8 billion in productivity.

Does Stabenow think that’s either fair, or sustainable?

Not only is America’s top corporate tax rate 39 percent (combined state and federal), it’s also the highest among the world’s industrialized countries. In shocking contrast, the top worldwide corporate tax rate average sits now at 22.5 percent, steadily on the decline from a 2003 high of 33 percent. The result has been American, and Michigan, companies continually disadvantaged among their foreign competitors, with less to invest in their products and people; lower wages and fewer jobs; less frequent innovations; and a U.S. economy ranked 35th out of 35 countries on the Tax Foundation’s annual corporate tax competitiveness index.

The Tax Cuts and Jobs Act currently in conference between the House and the Senate will reverse these trends, and place America back on track to a healthy, growing, sustainable future. It will ensure a pro-investment, pro-growth, pro-jobs economy that will directly benefit Michigan employees and employers alike, providing a much-needed boost to America’s ailing middle-class. Among many other things, it will nearly halve the tremendous burdens on S corporations (often individuals, and usually subject to the top income tax rate) and other small businesses to 25 percent. Coupled with a top corporate tax rate reduction to 20 percent, it will lead to more and higher wages, and much greater investment.

These reductions should be of particular interest to Michigan small businesses, and specifically to the more than 600 automobile dealerships throughout the state. Not only will their rate reductions spur greater purchasing, more growth and hiring beyond the 36,000 Michiganders they already employ; the specific exemptions they will enjoy to the annual limits on deducting interest payments (they pay much more in interest than most businesses, as they rely on loans to buy cars from automakers that they then sell to consumers) will ensure they can continue to build upon Michigan’s proud automobile history.

It’s time for Stabenow to stand up for her Michigan constituents, and to tell her D.C.-party leadership to do the same for America.

Rep. Klint Kesto, R-Commerce Township, represents Michigan’s 39th House district.