; and (5) retirement benefits for Members of Congress should not include free, taxpayer-funded health care for life. 526. Policy statement on tax reform (a) Findings The House finds the following: (1) A world-class tax system should be simple, fair, and promote (rather than impede) economic growth. The United States tax code fails on all 3 counts: it is complex, unfair, and inefficient. The tax code’s complexity distorts decisions to work, save, and invest, which leads to slower economic growth, lower wages, and less job creation. (2) Standard economic theory holds that high marginal tax rates lessen the incentives to work, save, and invest, which reduces economic output and job creation. Lower economic output, in turn, mutes the intended revenue gain from higher marginal tax rates. (3) Roughly half of United States active business income and half of private sector employment are derived from business entities (such as partnerships, S corporations, and sole proprietorships) that are taxed on a pass-through basis, meaning the income is taxed at individual rates rather than corporate rates. Small businesses, in particular, tend to choose this form for Federal tax purposes, and the highest Federal rate on such small business income can reach nearly 45 percent. For these reasons, sound economic policy requires lowering marginal rates on these pass-through entities. (4) The top United States corporate income tax rate (including Federal, State, and local taxes) is slightly more than 39 percent, the highest rate in the industrialized world. Tax rates this high suppress wages, discourage investment and job creation, distort business activity, and put American businesses at a competitive disadvantage with foreign competitors. (5) By deterring potential investment, the United States corporate tax restrains economic growth and job creation. The United States tax rate differential fosters a variety of complicated multinational corporate practices intended to avoid the tax, which have the effect of moving the tax base