S-Corp President Brian Reardon testified yesterday before the Senate Small Business Committee in a hearing entitled “Tax Reform: Removing Barriers to Small Business Growth.” As Inside Sources reported:
The hearing primarily focused on ensuring small businesses are considered in the current push to lower corporate tax rates. The Small Business Administration found that small businesses make up a sizable portion of the national economy at 49.2 percent of private-sector employment.
“As we all know, our tax code is in need of reform,” New Hampshire Democratic Sen. Jeanne Shaheen, the ranking member of the committee, said at the start of the hearing. “As Congress considers tax reforms, we need to make sure small businesses are at the table.”
The S-Corp testimony focused on themes familiar to S-Corp readers, including the fact that pass through businesses like S corporations employ the majority of private sector workers, so that any effort to reform the tax code should start with those businesses in mind.
You can watch the full hearing here
In addition to tax reform, the testimony touches on other important consistent S-Corp priorities like the S Corporation Modernization Act and the withdrawal of Treasury’s proposed 2704 regulations. Asked about how we ended up with one of the worst tax codes in the world, Brian made the case for action:
Back in 1986, when we last reformed the code, we brought the corporate rate down from the high 40s down to 35 percent. At the time that was one of the lower tax rates in the developed world. I think the average for the OECD at that time was about 44 percent. Today the average for the OECD is down in the low 20s while we’re still at 35 percent.
So we’ve been sitting still, both on rates and also this idea of a worldwide tax system. We tax our businesses on their earnings wherever they are made. Most countries in the last 10-15 years have moved to a territorial system. England did. You know, 10 years ago, England (UK) had the same problems we did — they had inversions, companies were moving overseas, they were losing to other countries…they completely revamped their rates, they cut the rates down, they moved to territorial, and now companies are moving to the UK not away from the UK.
You can read Brian’s full written remarks here.