House Speaker Paul Ryan, R-WI1, spoke to the Heritage Foundation Thursday morning about reforming the nation’s tax laws. His remarks as prepared are below. Scroll to the bottom for the video of the speech.
Thank you, Dr. Feulner, and thank you to the Heritage Foundation for having me. The very first thing I want to say is that all of us here owe so much to Ed Feulner. The conservative movement has never had a happier warrior. Or a more influential one.
I get a real kick out of a story that Ed tells from 1971 about a meeting that he had on Capitol Hill. He had heard some things about a freshman congressman who had some big ideas about economics. This, of course, shocked him. But that is how he came to know Jack Kemp. It was the first of many meetings, and many exchanges between them.
Back then, that is how it went. You had to essentially go door to door to find like-minded conservatives. Ed Feulner changed all of that, and gave us all of this. He inspired a generation to take on public service as a vocation, to reclaim our founding principles and apply them to the problems of the day.
One thing we know, is that ideas alone, are not enough. If they were, we would have fixed our tax code by now, and I wouldn’t be here taking up your morning. Bold reform means taking on not just the status quo itself, but the people who defend it . . . who stop at nothing to keep the system rigged. In that spirit, I am here today to talk about a big choice we face . . . a choice that is so central to the future of our country.
As you know, under President Trump’s leadership, we have released a framework for overhauling our tax code. The tax writers on the Ways and Means and Senate Finance committees are currently filling in the details. But the central tenets of our plan are clear.
Our plan will lower tax rates at every income level for families. It will deliver the lowest tax rates in modern history for job creators of all sizes. We will end the death tax, repeal the Alternative Minimum Tax, and eliminate the marriage penalty. And we will dramatically simplify the code altogether, clearing out the special-interest carveouts and loopholes. We will go from having the worst tax code among industrialized nations to one of the most competitive.
For families, all of this will mean more jobs, fairer taxes, and bigger paychecks. For our economy, it will mean the real growth that has eluded us for far too long. Tax reform is clearly in our economic interests. But it is also in our greater national interest.
And the reason is this: Embedded in our nation’s DNA is the notion that the condition of your birth does not determine the outcome of your life. What affects it—what drives it—is your own striving, your own sense of purpose. And if you work hard, you play by the rules, you can rise. If you fall short, you can bounce back. You can make something of yourself and of your dreams.
It is this idea that has helped make America so exceptional, and Americans so resilient. But in our time, its promise has dimmed. For many, the needle has barely moved.
Look at our tax system today, and you will see a picture of why so many hardworking people feel they’re being left out. As our tax code has grown, so has its bias against the middle class, and people striving to get there. The way things work now, the wealthy and well-connected have their prime choice of carveouts. They pay accountants good money to use all of these loopholes.
And who can blame them? If Washington is going to be in the business of picking winners and losers, of course people are going to line up to game the system.
And over the years, both parties—both parties—have enabled this, tucking in this or that pet provision, each with their own narrow set of beneficiaries.
So the working mother out there right now with some great idea for a business, but no connections . . . Or the family living paycheck to paycheck, trying to pay for college, trying to patch up the roof on the house, or just build up a rainy day fund for the unexpected. . .
The tax code offers you no meaningful relief. It makes you shoulder more and more of the burden. It hurts your ability to save and invest. It drowns you in a code so hopelessly complex that you have to pay someone to navigate it for you. You never really know how much you’re going to pay, and that’s the point.
Or, you may not be able to afford that, so you try to figure it out on your own, maybe you overpay, or make an honest mistake, and you end up getting a call from the IRS. Meanwhile, the well-connected have the resources and wherewithal to find just the right loophole or benefit.
As we stay locked in this cycle, other countries just keep passing us by. We are losing jobs to countries like China, who are taxing their businesses at much, much lower rates. Our foreign competitors are more than happy to take the growth in their businesses.
This tax code is sapping our aspirational spirit and enabling our decline. So this is no time to shy away from taking on the defenders of the status quo. The special interests who prop up this tax code seek to extract the most value for themselves, even if it means keeping the country on the path of decline.
While the last year has brought new hope, if we choose to do nothing, we allow people struggling to get by to become the permanent normal. We allow stagnation to become our way of life.
And you know as well I do that if we fail to restore real growth and opportunity, that plays directly into the hands of the Left. Stagnation is a breeding ground for a class-based society where elites in Washington seek to micromanage and predetermine the path of our lives. They would rather equalize the outcomes and lull us into lives of dependency. We have seen this too many times before, and we cannot let it happen again.
Right now, we have the chance to get off this downward path. To remove these barriers to upward mobility. To restore the value of work and ingenuity.
The choice is this: Are we going to be a country that renews its promise, or are we going to live on the graying laurels of the past? Are we going to leave things better off, or are we just going to leave?
You see, this is not merely about what kind of tax code we have. It is about something much, much more profound. This is about what kind of livelihood people can expect in this country. It is about whether moms and dads can afford to send their kids to college, or save for their retirement. It is about the dignity that comes with being able to take care of your own.
All of us have talked about tax reform for years, decades. The moment is here. And like any opportunity of a lifetime, it has to be seized. We have to choose to turn this page. We have to choose to do this.
An army of lobbyists will come to protect special interest provisions and to derail tax reform. When it does, we must be able to count on the foot soldiers of the conservative movement to see this through.
Hardworking families gain nothing if we slip into complacency. They gain nothing if we allow ourselves to be distracted. Our workers do not see their paychecks rise one penny if we shrink from this moment.
We know what we are for. We know what needs to be done. Now we have to have the resolve to achieve what we have fought for, for so long.
Now rest assured, you will hear—and already are hearing—the same recycled, stale criticisms from the naysayers and the defenders of the status quo.
These are the folks who believe we can just tax and spend our way to prosperity. And these are the folks who helped rig our tax system to benefit entrenched interests, and are intent on keeping it that way. I say: Let’s have this debate. Let’s tackle these baseless arguments head on.
Where better to start than the same tired, old line of attack that this a tax cut for the rich at the expense of the middle class? How original. They have been saying this for as long as I can remember.
But you know what the irony is? A tax system that disproportionately benefits the wealthy instead of the middle class, is the one we have today. It works best for those who know how to take advantage of all these breaks and deductions.
Under our plan, people in the middle get real relief. We are lowering rates so people can keep more of what they earn. Instead of seven brackets spread out across the code, there will be just three.
On top of that, we are going to nearly double the standard deduction so more people will pay no taxes on more of their income, and more families will get a break.
So in reality, this plan is really the single most important thing we can do to help the middle class. Lower tax rates. A larger standard deduction. A bigger child tax credit. And a code that is simpler and fairer for everyone.
And they will tell you that eliminating carveouts will actually hurt middle-class families rather than the special interests. Give me a break. Most hardworking Americans never see a dime from these loopholes. Instead, these pet provisions just reward the few and keep rates artificially high for everyone else. They only make it more difficult to give tax relief to those who need it the most.
So yes, we are throwing out the special-interest loopholes that riddle the code. But while doing that, we are going to preserve the incentives that people rely on, for homeownership and charitable giving. And we are going to simplify benefits for work, retirement, and higher education.
This is so important. Our current tax code does not only complicate your life every spring. It complicates the most important decisions families will make. It just adds to the stress.
Families trying to send their kids to college have to sift through about a dozen different tax breaks and about 100 pages of IRS instructions—just to figure out if there are benefits that could help them.
We’re going to simplify all of this, to the point that most Americans will be able to file their taxes on a form the size of a postcard.
For defenders of the current system, this right here—this right here—is their worst nightmare. Because it empowers people to see how much they are paying, and why. It increases transparency, and we know how terrifying a proposition that is for the IRS and the defenders of this tax code.
Finally, and this one may be the most off base . . . They will tell you that cutting the corporate rate only helps fat cats.
Here is what a candidate for president said in 2012: “Our current corporate tax system is outdated, unfair, and inefficient. It provides tax breaks for moving jobs and profits overseas and hits companies that choose to stay in America with one of the highest tax rates in the world.” That was actually not Mitt Romney. That was Barack Obama.
Now it is true that, because of all these loopholes and deductions, many corporations do not pay the 35 percent statutory rate. That actually proves my point. If we get rid of these special-interest carveouts and cut the statutory rate, corporations will pay what they are supposed to pay. That is what we mean when we say the system will be fairer for everyone.
But beyond that, fixing the business side of our tax code is really all about helping families and workers. Cutting the corporate tax rate means more jobs here in the United States. It will foster increased competition, which will directly drive up wages for our workers. Higher wages means bigger paychecks. Bigger paychecks and lower tax rates means more money in your pocket. And more money in your pocket means a better standard of living.
Over the past several months, I have traveled the country visiting with companies both large and small. I have toured factory floors, and talked to the incredible people making things right here in the United States—the people who are developing cutting-edge technology and reviving American manufacturing.
And wherever I have gone, I hear the same exact thing: ‘Our tax code is crushing growth. We have less to invest in equipment and R&D, we have less to invest in jobs and wages.
The defenders of the status quo are content with us having a tax system that drives good paying jobs overseas and traps trillions of dollars in profits abroad. We are not. We don’t want to just level the playing field for our businesses and our workers—we want to give them a clear advantage over our foreign competitors.
A territorial system like the one we propose will allow us to bring profits back home so they can be reinvested into our economy and our workforce. In fact, a survey out just this week from the National Association of Manufacturers found that, if enacted, tax reform will encourage a majority of American manufacturers to raise wages and hire more workers.
But if we are really, truly serious about creating more jobs, we need to help out our small businesses in a big way. That is why we are proposing a new, lower tax rate structure for all small businesses. This is the kind of bold reform that will revive Main Streets across the country, something that we so desperately need.
Working together—the House, Senate, and President Trump—we will see this through. Because this is the choice at hand. More decline and stagnation, or a renewal of the American Idea. Protect powerful interests, or empower the people who work hard and play by the rules.
But in the end, it will not be me who decides what we do. By now, I just get the sense that people know where I stand on tax reform . . . No, it will be this movement that decides which direction we take.
If we pull together . . . if we reject the usual tiresome cynicism . . . we will get this done. We will do something historic that improves people’s lives.
But if we do not, if we let up and lose our nerve…if we squander this opportunity, it will never come again. I am under no illusions about how difficult this will be.
But we cannot rest—I will not rest—until this work is done. Thank you very much.