House Ways and Means Chairman Kevin Brady, R-Texas, sat down with The Daily Signal to talk about the historic tax reform package passed by Congress and the impact it will have, and in some cases already is having, on individuals, families, and the economy. On the midterm elections, Brady says the key question voters should ask themselves is whether they want to go back to the old tax system—which is what he believes Democrats will try to do if they win a majority—or to keep pushing for further reforms. What follows is a lightly edited transcript of the video.
Genevieve Wood: Congressman Kevin Brady, thank you for sitting down with The Daily Signal.
Kevin Brady: My pleasure, thank you.
Wood: You were just speaking at The Heritage Foundation about taxes and tax reform and saying that we’ve made great strides in what we were able to accomplish this year, but you’re already looking ahead to tax reform 2.0.
Wood: What are the major benefits that came out of the most recent reform that maybe people don’t know about?
Brady: For families, boy, I think doubling that child tax credit, simplifying the code, almost 90 percent of Americans will no longer have to itemize, they’ll get their tax cuts without having to go through all the complications of it. I think that’s important. That AMT, that second tax …
Wood: The alternative minimum tax.
Brady: Yeah. So I think about 30 million Americans are freed from ever having to fool with that ever again, which is really for simplification, and [from] headaches. Really helpful. Small businesses, they love just being able to write off immediately their purchases in plants, equipments, software technology, just driving Main Street growth.
Plus there’s that new small business deduction, first time ever, 20 percent discount off the lower rates. We lowered the rates for every family and business. Then we gave small businesses a discount rate so they’d invest more in their workers, in their business, in their future. So, all of those are really key elements, but you don’t read about them that much.
Wood: No, you don’t. And many of those are things people can look forward to. They couldn’t do it this year, but it’s already having an impact on people’s paychecks, and even job creation.
Brady: There’s no doubt about it. Look at the economy; it’s taking off in a big way, and the fundamentals are right. So wages are going up, businesses are investing, you’re seeing money coming back from overseas, big investments here, announcements here in America.
After decades of watching [the economy] go only one direction, the wrong one, we’re now seeing it come back. And I still think the best is yet to come, because this really drives long-term growth.
Wood: This is an election year; midterms are coming up. And I’m sure you have heard those on the other side of the aisle, Democrats, saying tax reform actually isn’t the reason you’re seeing job growth, it’s not the reason the economy is doing better. And that, as [House Minority Leader] Nancy Pelosi said, this is just “crumbs” that Republicans gave the American people. How do you answer those charges?
Brady: They’re just misleading the American public. At the end of the day, one they can’t acknowledge, they put this country in a decadelong slump, where people’s expectations, economists’ expectations, just dumbed down to: “You know, America’s just going to have to settle for slow 2 percent growth. Your kids coming out of school, their opportunities won’t be very good, your paychecks. So don’t count on that.”
A decade of that. Well, now all that’s changed. So, that opportunity, that optimism, is back in a big way. And I think at the end of the day, [in] November, Americans are going to have to ask themselves do they want to go back to the bad old tax code, where Washington took more of what you earned, small Main Street businesses were hesitant to hire, and jobs kept moving over? Is that where you want to go? Or do you want this new growth? And more on your paycheck.
Wood: And you think that’s really the question that not only people may ask, but should ask? In the sense that, if Democrats win the House, what does that do to, not the future of tax reform, but what you all did just this year?
Brady: So, they’ll attack this tax code in a very aggressive way. … Look, they don’t believe it’s your money. They believe Washington has the first claim over what you earn. So, they are going to demand their more money coming to Washington, and them spending it. Versus what we did, which is to choose you. …
We have more faith in you to know what’s important to your family and to your American dream. So, at the end of the day … you look at all foreign affairs, you look at all those other issues, [and] the most fundamental one is: Who decides who has first claim over your earnings, you or Washington?
Wood: If Republicans are re-elected … and you could stay chairman of Ways and Means, and you get another shot at tax reform, what do you want to get done that you weren’t able to get done this year?
Brady: I think the key thing is, don’t do what’s happened in the past. For 30 years, we don’t touch the tax code, the special interest provisions, in those years. Just the opposite: Let’s change the culture in Washington. Let’s improve, become better, every year.
So, just like our local businesses that succeed, who ask themselves every day, “How do we become more competitive? How do we innovate more? How do we become better?” I want Congress, every year, to be asked themselves, for our country, for our families: “How do we become more competitive? How do you become more innovative? How do we get better?”
Because our foreign competitors, they’re not sitting still. They’re going to want to try to … We leapfrog them, they’re going to try to get an advantage over us. Our signal is, never again; we’ll never let America fall this far behind again.
Wood: Final question for you. Of all the things that were accomplished, what do you think is the most important, in terms of changing the way people think about taxes and the role of government?
Brady: I think the most important thing is what I see back home. It’s a new optimism about their future that they just haven’t felt. You can see it on Main Street. You can feel it among workers. There’s just an acknowledgement that we were in a slump and didn’t know it. Everyone was telling us, “This is the best.”
Wood: “This is the new normal.”
Brady: Yeah. So, America’s back. You take all the provisions, and there are some that are more favored than others. At the end of the day, America’s back in a big way. And for families and their future, that’s the big difference.
Wood: Congressman Kevin Brady, thank you for talking with us.
Brady: Thanks for having me.