Monday, July 30, 2012
U.S. House Will Act on Comprehensive Tax Reform, Extension of Current Tax Rates This Week
This week, the U.S. House will debate and vote on H.R. 8, the Job Protection and Recession Prevention Act, which will extend current tax rates through 2013. This common sense bill will prevent harmful tax hikes on America's job creators, investors, entrepreneurs and all Americans. Without such an extension, the weak economy will get much worse. The uncertainty has already taken its toll on the economy, business and investment. The economy grew by an anemic 1.5% in the second quarter. Small business owners continue to say anti-growth policies from Washington are driving uncertainty -- the unstable and ever-changing tax system is one such area driving low confidence.
In addition, the House will consider H.R. 6169, the Pathway to Job Creation through a Simpler, Fairer Tax Code Act of 2012. This legislation will provide a direct pathway to comprehensive tax reform in 2013. This bill will enable lawmakers in both the House and Senate to overcome significant technical hurdles that often cause bills to languish during the legislative process.
At a House Small Business Committee hearing last week (July 25), small business witnesses including SBE Council member Todd Flemming, CEO of Infrasafe, overwhelmingly agreed that fixing the tax system was the single most important thing Washington can do to assist business growth and entrepreneurship. While these entrepreneurs said Congress must also focus on other critical issues, simplifying the tax system - and making it more competitive and stable - was the top item they all agreed to when asked to name "just one" issue.
H.R. 6169 sets up the following structure for considering comprehensive reform in 2013:
• In the House, if the Rules Committee fails to provide for consideration of an applicable tax reform bill within 15 days after the Ways and Means Committee reports the tax reform bill or is discharged, a process for floor consideration of the bill, similar to an open rule, will automatically be put in place.
• In the Senate, any applicable tax reform bill would not be subject to a cloture vote on a Motion to Proceed or on individual amendments. A cloture vote may still be required to end consideration of the bill. The expedited procedures also require that amendments be relevant to the underlying bill.
For the process to apply, the legislation must be introduced by April 30, and include the following:
• Consolidation of the current 6 individual income tax brackets into 2, of rates not more than 10% and 25%
• A corporate tax rate of not more than 25%
• AMT repeal
• A broadening of the base to maintain an 18%-19% of GDP revenue level
• A move to a territorial system from our current worldwide system
These tax reform measures will make the U.S. much more competitive, and provide an extraordinary boost to entrepreneurship, small business investment, business confidence and economic growth. The U.S. tax system is failing our entrepreneurs, and the corporate tax rate is the highest effective rate among developed nations.
SBE Council will be supporting, and KEY VOTING H.R. 8 and H.R. 6169 for its forthcoming Ratings of the 112th Congress. A vote for these bills, is a vote for small business.
Karen Kerrigan, President & CEO