Genuine opportunity to act on tax reform should not be wasted
In early June, I was honored to participate in a tax reform roundtable discussion with Congressman Keith Rothfus that was hosted by the Alle-Kiski Strong Chamber of Commerce.
Along with my colleagues state Rep. Eli Evankovich and state Sen. Randy Vulakovich, we had the opportunity to listen to the concerns of small-business owners who are faced with the challenge of learning how to navigate our complex, burdensome tax code while trying to keep their businesses afloat.
How complex and burdensome? Here are a few numbers that will shock you – 4 million and $262 billion. As in the federal tax code stands at nearly 4 million words, according to the Taxpayer Advocate. So, it’s little wonder that the National Taxpayers Union recently quantified the lost productivity and total economic value of the compliance burden at over $262 billion. That’s a daunting number and one that has a detrimental effect on our economy and businesses, large and small.
Pennsylvania is home to 999,591 small businesses that employed 2.4 million workers in 2014, accounting for 47.3 percent of our private sector labor force. These hard-working men and women have enough on their plates as they strive to succeed – and continue employing Pennsylvanians – without having to allocate additional resources towards complying with a tax code that hasn’t been overhauled since VCRs were considered high tech.
It’s time for a change. It’s time for permanent, comprehensive tax reform.
Our economy – locally, nationally and globally – has evolved, yet our tax code is stuck in the past. Our high corporate tax rate of 35 percent stands in stark contrast to the rest of the world. Pouring salt in the wound, many small businesses often file at the individual rate, which can reach as high as 44 percent.
Our global competitors, realizing they need to attract and keep businesses, have strived to lower their tax rates – the average rate is now around 22 percent – while ours remain stubbornly unchanged. As a result, American businesses, seeking to overcome their disadvantages, move overseas in order to remain competitive. The nation’s economy and American workers come out on the losing end.
There are some who may argue that lowering the corporate rate will only help the big guys. They’re wrong. The reality is that small businesses here in Pennsylvania and across the nation make up the supply chain of those large corporations. If the big guy suffers, so does the little guy. It’s a symbiotic relationship.
Washington, D.C., seems to recognize our tax code must evolve if we are to grow the economy and create a welcoming business environment, instead of one in which companies are fleeing. As of now, the White House and House Republican leadership have introduced similar tax reform plans that would accomplish just that. Both would lower tax rates for businesses of all sizes, with the House plan also calling for full expensing of capital investments, among other pro-growth provisions.
There is a genuine opportunity to take action on tax reform this year, but it’s up to Congress and the White House to set aside partisan differences and seize it.
Saccone represents the 39th Legislative District in the Pennsylvania House of Representatives. The 39th District includes Finleyville and Nottingham, Somerset and Union townships in Washington County.