The two most impactful policy documents that come out of Congress are the federal budget and the tax code. The first reflects what the federal governments priorities are by how they fund those priorities. The second is more subtle but no less impactful, as it is used to encourage and dissuade a whole host of economic actions. Every time there is a proposal to amend the tax code, significant thought should be given to the outcome to be achieved. It is rarely as simple as tax the rich or don’t tax the rich.
Recently much of the debate on taxes has focused on reducing corporate tax rates and tax rates on the highest individual earners. An argument has be made that by reducing those rates, we allow companies and individuals to create more jobs or to pay more in wages. However, there remains an increasing income gap between the highest earners and the average earners, which indicates that this policy nudge has not worked to achieve the twin goals of more jobs and better wages.
For rural America, jobs are most often created on a much smaller scale than in large urban and metropolitan areas. Amazon is a good example of this. While Amazon may look at Denver as a landing site for its expansion, communities such as Pueblo, Durango or Grand Junction don’t have the population, workforce, or infrastructure to support a new business with 50,000 employees. Instead, most of our job creation in the 3rd Congressional District continues to be from true small businesses — those with less than 50 employees and many with only 2 or 3. Our tax policy should reward and incentivize these small businesses and the individuals that work for them.