By Newt Gingrich
Repealing and replacing Obamacare and implementing President Trump’s plan to build $1 trillion-worth of infrastructure are massively important for the president’s bold vision to make America great again, but the key to President Trump’s success is tax reform.
Many congressional Republicans are eager to solve the Obamacare crisis and have gone forward with what they can do under reconciliation to stop the bleeding.
President Trump acknowledged this to congressional leaders in a meeting yesterday.
But tax reform – as well as an infrastructure plan – will be the foundation for giving Republicans the momentum and moral authority to move ahead and fully reform the nation’s health care system.
The Republican repeal effort to reform health care will likely result in a bitter partisan fight. Probably no Democrat will vote to repeal Obamacare.
Once the initial repeal is achieved by a purely partisan vote, we will need to rebuild ties with moderate Democrats to get things done. We will need positive reforms in other areas that will bring some Democrats into a bipartisan coalition. Momentum is exactly what Republicans need to fully liberate this country from the entitlement state system that has dominated American government for a half-century. It is critical that Republicans are strategic about fixing the health care system and that it be surrounded by other issues.
After the president’s address to the Joint Session of Congress last week, I predicted his massive infrastructure plan will win over about a third of the Democrats. However, it will face scrutiny from Republicans concerned about finding ways to pay for it – even though I’m confident President Trump will negotiate a much lower price tag, develop public private partnerships, and reduce costs by eliminating reams of burdensome rules from the Code of Federal Regulations.
A stronger, more business-friendly economy will help ease tensions for both health care reform and infrastructure construction. Democrats will have a harder time opposing a Republican president who is overseeing a boost in job creation and economic growth during the long-term health care debate. And increased revenues from business growth will make a large infrastructure plan easier for budget-conscious Republicans to accept – especially when a stronger economy is leading the nation toward a balanced budget.
The first major step Congress should take is to reform the tax system so companies are incentivized to invest and build factories in the United States and create good-paying jobs. Speaker Paul Ryan has a plan that will do these things through a border adjustment tax, which is the right first step toward tax reform.
I recently spoke with a group of about 30 major American investors, and they expressed tremendous support for a border adjustment tax. Under our current tax system, it makes more sense for companies to move manufacturing jobs out of the United States, produce products in lower-wage countries, and then export their goods back to the U.S., because we do not impose corporate tax on imports.
Think about that. Our current tax system is essentially designed to drive production out of the United States. Companies who remain in the U.S. pay the highest business tax in the world and pay American workers American-level wages. Meanwhile, they are competing with companies who are paying foreign workers incredibly low wages – and paying no corporate taxes.
With a border adjustment tax, we would tax imports – just like more than 160 other countries that have either a value-added tax on imports, a border adjustment tax, or both. Right now, the United States is in the extreme minority of countries without a border adjustment tax – along with North Korea and South Sudan.
Reducing taxes on businesses and individuals, and reducing regulations, will cause more companies to invest in America again. The Tax Foundation reports that Speaker Ryan’s plan will create about 1.7 million jobs in America, and increase Gross Domestic Product by more than 9 percent.
Tax reform will provide the boost in jobs and production President Trump and Republicans in Congress need to build legislative momentum and implement the president’s infrastructure plan. Republicans will then be able to move from a clear position of strength as they deliberately and methodically rebuild our health care system.