WASHINGTON — It's no secret that Americans are fed up with the ongoing conflict and gridlock in Washington. While the partisan brinksmanship over the budget and debt has ebbed of late, approval ratings remain at historic lows, and with the midterm elections looming, members should be looking for something to deliver to the country, not just their partisan stalwarts.
The truth is, Congress has a significant opportunity to demonstrate joint leadership and to take bold action to unleash job growth in America. That is why we are coming together to urge bold action on perhaps the single most important policy item that could strengthen and sustain U.S. economic growth: comprehensive tax reform.
As leaders of business trade associations whose members collectively range from small businesses such as single-unit franchise owners to some of the world's largest companies, we hear directly about the challenges they face every day navigating the U.S. tax code.
Modernizing and simplifying our outdated tax system, in a comprehensive manner for both large and small businesses is a necessary catalyst for more robust business investment, a stronger economy and a healthier job market with wage growth that creates more opportunities for all Americans.
Today, businesses of all sizes face tremendous tax challenges and unnecessary obstacles that hinder growth and job creation.
Small businesses spend a disproportionate amount of time and resources complying with our complex patchwork of tax laws, when the economy would be better off with their time, energy, and resources invested in expanding their businesses and hiring more workers.
Moreover, a significant share of small business earnings are subject to income tax at the highest marginal individual rate, which increased in January 2013, increasing the tax burden and reducing the cash available to expand and grow their businesses.
Globally engaged U.S. companies are also disadvantaged by our tax system as they must compete with companies based in countries with much lower tax rates and more competitive international tax rules - a disadvantage that holds back the potential for U.S. businesses to grow and hire.
Together, we agree that U.S. business tax rules have failed to keep pace, while other countries have moved to modernize their tax codes to attract business. The goal of comprehensive tax reform should be to enable all businesses to thrive and create jobs, which will strengthen the economy.
Tax reform that threatens to raise taxes on businesses would stifle job growth and represents the wrong solution for America. Tax reform must also recognize that many business owners are taxed directly on their business income under the individual income tax system, rather than the corporate income tax system. True tax reform must reform the code for businesses taxed under the individual tax system as well as those taxed under the corporate tax system.
Tax reform must address the competitiveness of all businesses to fully strengthen the U.S. economy, enhance job creation and ensure that American workers and American businesses successfully compete.
Healthy businesses create jobs throughout the economy as jobs are added up and down the supply chain. Take as an example the businesses represented by our associations, which directly and indirectly account for tens of millions of American jobs and can create even more jobs with a competitive tax system.
Comprehensive tax reform should simplify the tax system and allow American businesses and their workers to compete and win both at home and abroad. And in today's modern economy, small businesses compete and increasingly win globally; in fact, approximately 26 percent of globally engaged U.S. companies are classified by the U.S. government as small businesses.
Given this fact, the entire business community must work together, collaboratively, to advocate for comprehensive reform.
A healthy U.S. economy depends on the strength of all businesses - large and small. Our current outdated tax rules impede the ability of America's businesses to grow and compete, and both political parties agree that the current tax code doesn't work for individuals or businesses.
Our members firmly support comprehensive tax reform, and we encourage policy leaders in our nation's capital to come together to create simpler, more up-to-date, and competitive tax rules for a healthier economy and more jobs for American workers. The time is now.
ABOUT THE WRITERS
Steve Caldeira is president and CEO of the International Franchise Association, and John Engler, the president of the Business Roundtable, an association of CEOs of leading U.S. companies. Readers may write them at Business Roundtable, 300 New Jersey Avenue, NW, Suite 800, Washington, D.C. 20001.
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