WASHINGTON – Sen. Ted Cruz (R-Texas) said Congress should take advantage of the chance to use tax reform to repeal Dodd-Frank, which he argued has helped large banks expand while hurting small community banks and credit unions.
Cruz hopes tax reform is signed into law by “the end of this year or early next year.”
“When enacting tax reform, we should also use it as an opportunity to repeal Dodd-Frank. Dodd-Frank is one of the most damaging pieces of legislation in modern times. Dodd-Frank has wreaked havoc. Dodd-Frank was sold to the American people to stop ‘too big to fail.’ How has that worked out? The big banks are bigger and the smaller banks, the community financial institutions, have been devastated,” Cruz said last week during a Tax Foundation event on tax reform at Hillsdale College’s Kirby Center.
“Since 1994, the number of community banks has fallen by 40 percent. Their share of assets has fallen by more than half from 41 percent to 18 percent. What’s happened to the big banks? Their share of assets has risen from 18 percent to 46 percent,” he added.
“Dodd-Frank is great if you’re a giant financial institution. It is lousy if you’re a local community bank and if you’re a credit union. And in the four years after Dodd-Frank, community banks lost market share at a rate double what they were losing before then – 12 percent versus 6 percent.”
According to Cruz, more than 80 community banks have “gone under” in Texas while 1,800 have closed across the nation.
“This is not good for the banking institutions but it’s particularly bad for small businesses. If you care about growth, if you care about small businesses, who do you think is lending to small business? Who do you think lends money to that farmer to buy the tractor? Who do you think lends money to that small restaurant owner to open a new restaurant and hire the waiters and waitresses and cooks? It’s the small community banks, the financial institutions hurt by Dodd-Frank,” he said.
Cruz said President Trump should push for a tax reform plan that replaces all existing tax forms with a postcard.
“In 2016, Americans spent nine billion hours on their taxes – nine billion hours is a lot of time. That’s more time than some people have in a single day. Nine billion hours wasted. It doesn’t produce anything – 2.6 billion of those hours on individual income taxes. The average American should be able to fill out their income taxes on a postcard,” he said.
“You want a powerful legacy? Let me say to President Trump, you want a legacy of tax reform? Throw out the long tax forms we file and replace it with a simple postcard. That is something Americans across this country will remember as a lasting legacy,” he added.
The former Republican presidential candidate said no one fully understands the existing tax code.
“There are, right now, more than 75,000 pages of tax law, code and regulations and case law. Nobody understands it all. You don’t understand it all. I don’t understand it all. Your accountant doesn’t understand it all,” he said.
“The tax lawyers don’t understand it all, but a lot of people make a lot of money because no one understands it and we’re going to fight about it forever, ever and ever. How about making it simple and straightforward? Simplicity has power. Bold simplicity has enormous power,” he added.
Cruz called for “immediate expensing” to be part of tax reform.
“Right now, under current law, businesses deduct the cost of acquiring capital assets; buildings, heavy equipment, vehicles, renovations, over a period of years – complicated depreciation scales. One the most important reforms that we ought to include in tax reform is full and immediate expensing. If you spend money on capital you should expense that immediately,” Cruz said.
“Expensing is not agnostic between dollars here in America and dollars abroad. Expensing creates an enormous incentive to invest dollars here in America, on American soil that create jobs,” he added.
Cruz also said the Republican majority in Congress isn’t quitting on efforts to repeal and replace Obamacare. “When it comes to Obamacare, I don’t think we’re done,” he said. “I don’t think failure is an option. I believe we can still get to ‘yes,’ honor that promise, lower the cost of premiums and make health insurance more affordable.”