Dear S-CORP Member:
As the President of a multi-generation family business, the question Ib m often asked is b Why has the McIlhenny Company stayed private all these years?b B Why, indeed.
We do face limitations as a family-owned S corporation.B We pay higher tax rates on our business income and we have limited access to the capital markets.B Unlike Apple, we canb t borrow money every time we pay a dividend.B Dividends come from earnings, or they donb t come at all.
But being a family business is part of our identity.B It means every decision we make is made here at the local level rather than at b corporate headquartersb in another state or another country.B Selling Tabasco to a corporate interest would mean turning our backs on our community, its history, and its people.
Thatb s not just a McIlhenny story b itb s an S corporation story.B The S corporation was created by Congress 50 years ago to encourage closely-held and family-owned businesses and to diversify Americab s commercial sector.B Congress recognized the value of having economic decision-making spread across the country.B Diversification is good for investors, and itb s good for our employment base too.
The S corporation experiment has been an amazing success.B Five decades after their inception, there are more than 4.5 million S corporations, and they employ one out of every four private sector workers.B That means that every day, some 30 million Americans get up and go to work at a business where the decisions that affect their future are made by people working and living in the same community.
So the S corporation is more than just a tax structure for organizing your business.B It is a revolutionary means of helping closely-held businesses — and the communities they serve — thrive and grow in an increasingly competitive world.
One of the goals of the S Corporation Association is to ensure policymakers understand this history and the role S corporations play in todayb s economy.B Thereb s a tremendous amount of misinformation out there, which is why S-CORP has invested in original research to help tell our story, including key facts like:
- Businesses organized as S corporations and partnerships employ the majority of private sector workers.B Small business is bigger than big business in the United States.
- S corporations pay the highest level of tax of any business structure b more than 30 percent!B Far from being b tax freeb as the Wall Street Journal once charged, S corporations pay their fair share, and then some.
- High tax rates on S corporations and C corporations alike cost Americans jobs b lots of them.B According to our research, the higher taxes imposed in last yearb s fiscal cliff will cost us more than 700,000 jobs in the coming years.
Armed with these facts, the S Corporation Association has led the charge to make certain policymakers in Washington, DC understand the important role private business ownership plays in job creation and business investment.B In recent years, S-CORP has:
- Organized DC trade groups to be the voice of the pass-through business community during the tax reform debate;
- Positioned our S Corp Modernization Act (H.R. 892) to be included nearly word for word into the Chairmanb s tax reform plan;
- Championed the reduction of the built-in gains holding period to 5 years and moved the provision from an after-thought to an annual tax expenditure item;
- Twice defeated efforts to expand payroll taxes on S corporations; and
- Organized exporters and defeated efforts to repeal the IC-DISC benefit.
Pretty good stuff from a trade association named after part of the Tax Code.
Looking forward to 2014, we plan to build on this success by expanding our membership –the more members we have, the larger our voice — while increasing our advocacy efforts before Congress.B Like the mouse that roared, we will be heard on tax reform, extenders, and other tax issues important to our membership.
What can you do to help?
- Renew your membership for 2014.B S-CORP is not flashy, and we donb t have lots of bells and whistles.B What we do have is great advocacy, and advocacy starts with our members.B Renew today!
- Spread the word.B Our best ambassadors are our members.B Let other private businesses in your community know about S-CORP and the important work that we do.
Again, I am deeply appreciative of your support and look forward to working with you in 2014 to defend the greatest vehicle for private enterprise ever invented — the S corporation.
Chairman, The S Corporation Association
President & CEO, The McIlhenny Company
To download Chairman Simmons’s letter, please click here.