More effective option sought from tax code

Dan Danner
Dan Danner

Small business owners are rightly proud of their reputation as job creators. But their ability to create jobs is considerably complicated by the federal tax code burden they face.

Today’s federal tax code is so complex and unfair that fully 91 percent of business owners surveyed recently by the National Federation of Independent Business said they’ve given up trying to wade through the IRS maze. They now turn to professionals to sort things out.

Angered and frustrated, Main Street proprietors have had it with a tax system loaded with inconsistent provisions and tweaked with endless changes that not only increase their compliance costs, but also prevent them from planning strategy. What’s more, small business owners say it’s discriminatory and unjustifiable the federal government has created a tax system that picks winners and losers in favoring certain industries and types of businesses over others.

That’s why the NFIB and several other leading business organizations have forged an alliance to battle for tax rate equity.

The Coalition for Fair Effective Tax Rates is working to build broad support for meaningful reform — specifically, a simpler and fairer tax code that will stop punishing smaller businesses whose tax bills are often proportionately higher than companies many times their size.

Size matters in legislative circles. Larger businesses have more financial resources, tax experts and legal lever-pullers devoted to using the nearly 74,000 pages of federal tax code to their benefit. Not so for most small firms that file as individuals and are unable to reap the benefits major industries enjoy, including corporate carve-outs that drastically reduce final, or effective, tax rates.

According to the U.S. Small Business Administration, small businesses pay on average $1,584 per employee for tax compliance. Moreover, the cost of complying with the tax code is 67 percent higher for a small businesses than larger businesses.

That’s why 85 percent of small business owners say Congress should replace the tax code with a system that’s fair for all and rational. More than 75 percent of those polled called for a code with fewer preferences in exchange for a lower rate, while 70 percent said revisions should lower the overall tax burden along Main Street.

For the millions who own and operate the nation’s increasingly vulnerable small firms, what’s important is what they pay at the end of the day. They aren’t hoping for big-ticket tax breaks or special handouts.

Small-business-friendly tax reform should deliver fair effective rates that will fire up the Main Street job-creating machine and stoke the economy.

The time has come for tax fairness.