Simplifying the tax code and eliminating double taxation is always a good and popular policy. Congress will have an opportunity in the post-election lame duck session of Congress to streamline the tax code. Members of both parties should embrace ideas to provide tax cuts to Pennsylvanians, who are being hurt by rising inflation.
In this state, there was a significant number of voters concerned with tax policy voting that recently voted in a historic election. An election which ended up determining control of the governor’s office, the majority in the United States Senate and who will be the next Speaker of the House of Representatives. Now is the time for politicians to focus on the economy, energy development, and tax policy.
Right now, Congress has legislation pending which will reduce taxes for certain taxpayers. The End Double Taxation of Successful Consumer Claims Act provides relief to taxpayers who win a lawsuit against a company for abuse or fraud, so they don’t get taxed on the money they have to spend on lawyers. This policy is something some Republicans resist because they mistrust the trial lawyer bar for political reasons and don’t wish to encourage lawsuits against corporate America. The flaw with this argument is that injured consumers have more money taken by the Internal Revenue Service (IRS) than the federal government deserves. Republicans should choose to minimize the power of the IRS and overcome their political misgivings about trial lawyers to benefit taxpayers.
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The IRS does not need any more money from Pennsylvania taxpayers — quite to the contrary. The federal government has received record revenues and, according to the Tax Foundation, “[i]ndividual income tax receipts rose to an all-time high of $2.04 trillion in fiscal year 2021 and receipts are running 36 percent higher in fiscal year 2022. Total federal tax collections, including payroll and other taxes, reached an all-time high in nominal terms of $4.05 trillion in fiscal year 2021, amounting to 18.1 percent of GDP, well above the long-run average of 17.1 percent over the 20 years prior to” the Tax Cut and Jobs Act of 2017. Maybe it is time for both parties to support another round of tax cuts to let the American people keep more of their own money in this time of economic hardship.
Pennsylvanians want politicians to embrace the idea of getting the economy back on track. The original Trump tax cuts were a great idea and now it is time for another round while, at the same time, simplifying the tax code. President Trump’s promise that Americans could file a new, easy tax form which resembles a post card is in need of returning to the agenda of politicians. Congress, in conjunction with — and approval of — the current administration, just hiked taxes and gave more cash to the IRS to harass taxpayers. The new law increases funding for the IRS to hire more agents by $80 billion over the next ten years. Congressional analysis of the bill scored it as an investment which will result in $200 billion increased revenue for the federal government over the next decade. The federal government already has record high tax revenue collections — the federal government needs to find ways to cut spending and bring some sanity to the annual budget.
Pennsylvania voters just overwhelmingly elected Rep. Brian Fitzpatrick (R-PA) to another term. In the post-election session of Congress, there is an opportunity for Congress to provide a positive impact on the day to day lives of the people living here. One way is to fix the complicated tax code and address the burden of federal taxation weighing down average Pennsylvanians.
Peter Mihalick is former legislative director and counsel to former Reps. Barbara Comstock, Virginia Republican, and Rodney Blum, Iowa Republican.