WASHINGTON - On Tax Day, American families and employers are keenly aware of the deep cut the government is taking out of their household incomes and hard-earned profits - especially during the slowest economic recovery since the Great Depression.
A heavy tax burden means consumers have less to spend in the economy and businesses have less for hiring, expansion and investment. When taxes go up, the economic growth rate drops.
Even though we badly need economic growth to hasten our recovery, many of our leaders still champion an agenda that requires greater resources to implement more programs.
To pay for it, Senate Democrats recently passed a budget with an additional $1.5 trillion in tax hikes. These drag down the economy and preclude Congress from undertaking the pro-growth comprehensive tax reform needed to revitalize the economy.
Rather than scale back the agenda or look for serious savings, some government leaders believe the answer is to simply raise taxes, not slow spending. The truth is we can't tax our way out of our fiscal mess.
To keep our economy humming and put the government back on sound fiscal footing, we must undertake comprehensive tax reform and exercise real spending restraint through fundamental entitlement reform.
On taxes, the right kind of reform will actually drive the stronger growth we need. The right reforms would spur job creation, raise American competitiveness, encourage capital investment, foster innovation and generate more revenue at every level of government.
Comprehensive tax reform should broaden the tax base so more people are paying into the system and simplify compliance for all business entities.
The U.S. corporate tax rate - one of world's highest - must be lowered so American companies can compete in the global economy. Likewise, businesses that file their taxes as individuals, or pass-through entities, suffer from some of the highest rates among developed economies.
Finally, we must move to a territorial system so American companies operating overseas aren't taxed twice on their earnings - once at home and once abroad.
Tax reform must be done in conjunction with spending restraint - and there is no greater driver of deficit spending than our entitlement programs. Spending on Medicare, Medicaid and Social Security accounts for almost 58 percent of all federal spending. These programs must be reformed by slowing the rate of increase and making reasonable adjustments phased in over a number of years.
The business community should keep the pressure on. Let's remind Congress and the administration that families and employers must make tough decisions. It's time for Washington to follow suit.
No: We can't tax our way out of trouble
Every Monday we offer pro/con pieces from the McClatchy-Tribune News Service to give readers a broad view of issues.
Martin A. Regalia is senior vice president for economic and tax policy and chief economist at the U.S. Chamber of Commerce.