The United States is long overdue for a major tax reform bill. After eight years of economic weakness, we need a tax code that works for workers and job creators, not against them.
Our current tax code is strangling business growth, job creation, and higher wages. Our nation has the highest corporate tax rate in the developed world, putting American businesses at a competitive disadvantage in the global economy. Meanwhile, small businesses and family farms face high tax rates and other burdensome tax policies that make it difficult for them to expand and create new jobs.
Tune into Squawk Box at 8:30 a.m. Sen. John Thune will be a guest.
The most important tax-related measures we can take to boost economic growth are lowering business tax rates and allowing businesses to recover their investments faster. This week, I'm introducing a tax bill in the U.S. Senate to address the second part of that equation. My bill, the Investment in New Ventures and Economic Success Today (INVEST) Act, focuses on helping small and medium-sized businesses by allowing them to recover their investments more quickly – in many cases expensing them immediately – thus freeing up capital to reinvest in the company.
The INVEST Act would allow new businesses to deduct a substantial part, if not all, of their startup costs within the first year. Currently, new businesses can only deduct $5,000 of these costs. My bill would substantially increase that amount to $50,000. This would significantly improve the stability of new businesses by freeing up cash they can use to grow. Plus, it would help encourage new business creation, an essential feature of a healthy economy.
A second part of my bill focuses on increasing cash flow for small and medium-sized businesses, farms, and ranches – in particular those that operate as corporations and partnerships – by allowing them to use cash accounting instead of accrual accounting. This would allow a business to be taxed on income when it receives the cash from the customer and to deduct an expense when it pays its supplier.