PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Tax Reform Heating Up

By at 2 August, 2017, 1:50 pm

Entrepreneurs and small business owners, sign the Petition for Tax Reform in 2017!

by Raymond J. Keating-

Discussions about tax reform are heating up, and that’s good news for entrepreneurship, small business, workers and the overall economy.

The last time we saw tax reform was in 1987. Since then, the U.S. tax system certainly has become far more complex, has experienced a couple of instances of substantive tax relief (the 1997 capital gains tax cut and the George W. Bush 2001/03 tax relief), and unfortunately, suffered under an assortment of tax increases (namely, the George H.W. Bush tax increase of 1990, the Bill Clinton tax hike of 1993, and under Barack Obama, the ObamaCare tax increases and the 2013 tax increase).

The Obama tax increases certainly have played a real part in the U.S. suffering under one of the slowest recovery/expansion periods in history. Indeed, looking back over the past decade, give or take, SBE Council published a series of reports last year leading up to the election. These analyses found daunting gaps or shortfalls in terms of real GDP, real private-sector investment, productivity, income, exports and small business exporters, and jobs. Also, we recently updated the report on a disturbing shortfall in the level of entrepreneurship and in the number of businesses in our economy.

Substantive tax relief and reform would enhance incentives for working, saving, investing and entrepreneurship, thereby – along with other undertakings, such as regulatory relief, and ObamaCare repeal and replacement – strengthening the policy foundation for stronger, sustainable economic growth.

Unity on Tax Reform

Indeed, recent statements from key leaders in Congress and the Trump Administration are very encouraging.

For example, in a joint statement of tax reform, the White House and leaders in the House of Representatives and the Senate made clear that they are working together in pointing this entire effort in a productive direction. In this statement from House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX), it was said:

We are all united in the belief that the single most important action we can take to grow our economy and help the middle class get ahead is to fix our broken tax code for families, small business, and American job creators competing at home and around the globe. Our shared commitment to fixing America’s broken tax code represents a once-in-a-generation opportunity, and so for three months we have been meeting regularly to develop a shared template for tax reform…

“We have always been in agreement that tax relief for American families should be at the heart of our plan. We also believe there should be a lower tax rate for small businesses so they can compete with larger ones, and lower rates for all American businesses so they can compete with foreign ones. The goal is a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas. And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base. While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform…

“American families are counting on us to deliver historic tax reform. And we will.”

Obviously, it’s great to see that small business is a priority in the overhaul effort.

On MSNBC’s “Morning Joe,” Ways and Means Committee Chairman Kevin Brady declared:

“The key is permanence. Whatever we do in tax reform, we really want businesses to make the long-term investment decisions that drive jobs, drive paychecks in a big way … The statement we laid out, it’s about unifying behind principles, it’s about urgency. [Tax reform] needs to be done this year to get the economy going, and the President supports this approach.”

Among longtime supporters of pro-growth tax relief and reform, there were declarations of support, including, for example:

Americans for Tax Reform President Grover Norquist said:“The joint White House, Senate, and House statement proves that tax reform is on schedule for 2017. . . . This bold plan is the key to unlocking at least three percent economic growth, creating millions more jobs, and giving American families lower taxes and more take-home pay.”

The American Conservative Union declared: “The American Conservative Union (ACU) recognizes the need for tax reform as our economy has suffered from anemic growth over the last eight years. Working families and small businesses are served best when the economy is thriving and when the tax code works for them… ACU believes that comprehensive tax reform that embodies conservative principles begins with an understanding that the tax code must be overhauled and simplified. The rates must be lowered, both at the individual level and the corporate level so that America can compete with the rest of the world. The IRS must be reined in so that they are working for taxpayers, not against them.”

U.S. Chamber of Commerce Senior Vice President and Chief Policy Officer Neil Bradley said, “Today’s announcement, and the unity of vision shown in it, bolsters our confidence that tax reform can be enacted this year. The engagement and enthusiasm for pro-growth tax reform from Trump administration officials and Congressional lawmakers is what will propel this over the finish line for American businesses, workers, and families.”

And tying it all back to entrepreneurship and small business, SBE Council President & CEO Karen Kerrigan observed, “Reforming our nation’s tax system is a top priority for small businesses and American entrepreneurs.  Bold reform is critical to stronger entrepreneurship and new business creation in America, which is at a 40-year low and is undermining economic opportunity and hope for so many Americans. Entrepreneurs are reassured that the promise of fundamental tax reform continues to advance forward. We look forward to our continued work with leaders in the Congress and key people in the White House who have continuously provided small business owners and our organization with the opportunity to provide input and ideas… We are well on our way to a modern tax system that encourages small business success, robust capital formation and entrepreneurship in America.”

On August 1 at a White House small business event, President Trump reaffirmed his support for small businesses, stating that “America is on the verge of a golden age for small business” and tax relief was key to that. He stated: “We are pursuing bold tax cuts so our companies can thrive, compete and grow.”

In the end, pro-growth tax relief and reform is a necessity if we hope to close the yawning gaps that the U.S. has suffered under over the past decade, and to get back on a path of robust, sustainable small business, economic, income and employment growth.

Join our effort! Sign the Petition for Tax Reform in 2017!

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

 

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