Hoeven: Why we need tax reform for the American people
North Dakota welcomed President Trump as he continued his tour around the nation to move the ball forward on comprehensive tax reform. The president drove home how our current tax code, which has not significantly changed since 1986, puts our nation at a competitive disadvantage, harming our workers and driving investment overseas. Overhauling our tax system will grow and strengthen our economy, create good jobs, increase wages for workers, and provide relief to individuals and families.
There are few who deny that the tax code places an enormous burden on families and businesses. Collectively, Americans spent nearly 9 billion hours complying with the Internal Revenue Service last year, costing our economy $409 billion. These costs are due to the complexity of the tax code, which creates uncertainty and makes long-term planning difficult, whether you are balancing the household budget, preparing for retirement or investing in your business.
On top of this, we operate under the highest marginal corporate income tax rate in the industrialized world at 35 percent, which rises as high as 45 percent when including state taxes. At the same time, our pass-through businesses, which includes most of our farmers and ranchers, face combined federal and state marginal rates of up to 48.6 percent under the individual tax code. In comparison, the average corporate rate among OECD nations is 24 percent, going as low as 9 percent. Additionally, companies are now holding approximately $2.6 trillion in overseas earnings, money that should be invested here at home. Despite these high rates, our nation has remained an economic powerhouse due to the innovation and hard work of our citizens. Reforming our tax code will make our nation more competitive and help grow the economy, creating more economic opportunities in North Dakota and across the nation.
That is why it is vital that we advance comprehensive tax reform that simplifies the IRS code and reduces rates. That will put more money in the pockets of individuals and families, empower private investment, drive domestic job creation and increase wages through higher demand for labor and lower business costs. All the while, we can ensure stable government revenues through a broader tax base, a growing economy and a more efficient tax system. That means we will continue to be able to fund our priorities and get our debt and deficit under control.
That's why we are working to get tax reform done for the American people, for the benefit of both current and future generations.