The Wall Street Journal reports that Ways and Means Chairman Dave Camp wants to push tax reform that addresses both the corporate and individual tax codes. That’s good news for S corporations and the majority of employers out there. According to The Journal:
The chairman of the House Ways and Means Committee wants to cut the top U.S. tax rate to 25% for individuals and corporations, and cut or eliminate many popular deductions.
The odds of quick action appear slender. But the move, from Rep. Dave Camp (R., Mich.), is significant as a marker in what will likely be a multiyear debate over revamping the tax code. The plan also provides Republicans with a position to pitch in the 2012 election, a campaign that promises to focus heavily on the economy and jobs.
Washington Wire readers know that President Obama has been pushing a “corporate-only” reform plan that would likely raise taxes on closely-held businesses in order to offset the cost of reducing rates on large corporations. The news of this plan has raised alarm and concern among the business community. The net result would be a tax hike on many employers at a time when unemployment hovers around 9 percent.
The Camp proposal would address these concerns by reducing the rate for both corporations and individuals, including those businesses not structured as C corporations.
As The Journal points out, quick action on this issue is unlikely, but you never know. The S Corporation Association has in progress a study that will increase our understanding of exactly how many employers would be affected by a corporate-only effort and by how much. It’s an important piece of the story, and we’re looking forward to adding it to the conversation.
Senator Snowe Stands up for Private Firms
In the face of Administration proposals to raise taxes on private employers, Senator Olympia Snowe (R-ME) introduced legislation last week expressing her strong opposition. The bill — S. Res. 88 — is a Sense of the Senate resolution highlighting the harm such a plan would impose on employers. As Senator Snowe observed when introducing the resolution:
“It is becoming increasingly clear, and increasingly concerning, that the Administration is proposing to raise taxes on America’s small businesses, either by forcing them to reorganize as subchapter C corporations solely for tax reasons and be subjected to new and additional taxes, or, by allowing them to remain organized as flow-through entities – such as limited partnerships and subchapter S corporations – where they will face massive increases after 2012 when current tax rates expire,” said Senator Snowe. “I urge my colleagues to join me in saying to those who would raise taxes on the millions of businesswomen and businessmen we are counting on to create the jobs we need to put the recession firmly behind us – no thank you.”
Snowe’s resolution highlights the significant investment and employment contribution of small and closely-held businesses to our economy and outlines the threats they face from policymakers. The resolution states that it is the sense of the Senate that:
(1) The Federal Government should preserve the organizational options available for businesses to operate as the businesses choose, including as flow-through entities;
(2) Raising taxes on businesses that create jobs will be detrimental to the economic recovery of the United States;
(3) Generating increased tax revenue on the backs of the small businesses of the United States is inconsistent with, and will impede, job creation; and
(4) Any legislative approach to comprehensive fundamental tax reform should include a debate on the individual rates at which most businesses in the United States should be taxed, rather than narrowly focusing on corporate tax rates or forcing small business owners into corporate status for tax purposes.
S-CORP could not agree with Senator Snowe more. “Corporate-only” tax reform spells danger for the majority of our nation’s employers. A comprehensive approach must be taken to ensure these employers are protected from such tax increases.
Thanks to Senator Snowe for her consistent efforts to protect private businesses and the policies they rely on, and we look forward to standing beside her in the coming tax reform fight.