BY JORGE MARTINEZ
There are a lot of good reasons why reforming the tax code makes sense. But for the people of the Rio Grande Valley, the promise of increased jobs and more disposable income stands head and shoulders above the rest.
Done right, tax reform will be the economic boon that our community desperately needs.
The numbers tell the story. The Rio Grande Valley is home to several of the country’s poorest cities. In our area, nearly one out of every three individuals live below the poverty line. This includes places like McAllen and Brownsville where folks struggle daily to make ends meet.
Thankfully, the White House and Congress are working on a tax plan that is not only fairer, flatter and simpler, but one that will grow the economy and allow workers to keep more of their hard-earned money.
We know that a good tax plan can do this because it has worked before.
In the five-year period after the 1964 Kennedy tax cuts, GDP grew at an average quarterly rate of 5.2 percent, and the economy added a whopping 9.3 million jobs. After President Ronald Reagan reformed the tax code in 1986, average quarterly GDP grew at 5 percent, take-home pay increased more than $2,700 and the economy added 11.7 million jobs. More recently, following President Bush’s tax cuts, the economy added 6.9 million jobs and disposable income went up by over $2,500.
Some may ask, “So, what would the current plan mean for my bottom line?”
Well, according to a pair of recent studies, including one by the White House Council of Economic Advisers and Boston University, cutting the corporate tax rate — as is being called in the proposed framework — might translate into a significant chunk of money for families to save, invest, or spend as they see fit. A sum that could mean anywhere between $4,000 or as much as $9,000 per year, for an average household according to the White House Council of Economic Advisers study.
Unfortunately, not everyone agrees that you ought to keep more of your hard-earned money. There are some in Washington who are convinced that the best way to look out for ordinary Americans is by keeping taxes high. But as President Reagan once said: “You can’t be for big government, big taxes and big bureaucracy and still be for the little guy.”
He’s right. What hard-working Americans need is tax relief. And that’s especially true for our nation’s small-business owners, who are the backbone of our economy. They provide jobs and opportunities to many throughout their communities.
And a rapidly growing number of business in Texas and throughout the Southwest of our country, are Latino-owned businesses. According to Geoscape, a multicultural marketing firm, the number of Hispanic owned businesses grew 57 percent between 2007 and 2015.
Unfortunately, our tax code’s complexity requires our residents and business owners to spend billions of hours and dollars on tax compliance. That’s precious time and money that could be used for other things, like growing their business and expanding opportunity to others.
It’s possible to do this if Congress seizes this once-in-a-generation opportunity to dramatically reform the tax code to ease the tax burden on taxpayers and job creators.
The people of the Rio Grande Valley could use a good economic jolt that will lead to more jobs and more disposable income. A good tax plan could do just that.