Are business owners in favor of the tax reform plan?May 3, 2017 3:38 pm Leave your thoughts
The business world is reacting to the White House's stated intentions to dramatically reform the U.S. tax code, and for the most part, entrepreneurs like what some of the particulars include.
On April 26, the National Economic Council called for an across-the-board cut to corporate taxes, slashing them from their current rate of 39 percent to 15 percent. The marginal corporate income tax rate in the U.S. is among the highest in the world, topped by the United Arab Emirates and Chad.
The rate slash, if approved and signed into law, would not only be for corporations, but for all businesses. Plus, in addition to lowering entrepreneurs' income tax burden, the NEC also aims to do away with the seven income tax brackets that are now in place, replacing them with three instead.
Gary Cohn, chief economic advisor to President Donald Trump and director of the NEC, noted how the current tax code is needlessly convoluted and complicated – and has been for a long time. It's time to make things simpler again.
"What was once only one tax form is now nearly 200."
"In 1935, we had a one-page tax form consisting of 34 lines and two pages of instructions," Cohn recalled. "Today, the basic 1040 form has 79 lines and 211 pages of instructions. Instead of a single tax form, the IRS now has 199 tax forms on the individual side of the tax code alone."
He added that taxpayers combined devote seven billion hours solely to complying with the tax filings systems in place. Even then, the vast majority of people – 90 percent – require assistance with an accountant or tax professional.
NFIB lends its support to tax reform proposal
Though detractors to the tax plan say that it is long on promises and short on substance, business owners have applauded the proposal, including the National Federation of Independent Businesses.
"We applaud [the White House] for continuing to push for tax reform that would provide relief to businesses of all sizes and structures," said Juanita Duggan, NFIB president and CEO. "Small business makes up nearly half of the economy and nearly half the jobs. If the goal of tax reform is to boost the economy, then tax reform must start with small business."
She went on to say that rolling back the corporate tax rate would pay immediate dividends, enabling more companies to compete and serves as an impetus for aspiring small-business owners to pursue their entrepreneurial aspirations.
"We are very happy that the White House has listened to small businesses," Duggan added.
"Nearly 70 percent of business owners are optimistic about what's ahead."
Businesses are optimistic about the future
Sentiment among entrepreneurs has strengthened in recent months. Almost 70 percent of small- and medium-sized businesses are feeling encouraged about how things will go for them in terms of economic growth during the next year, according to a recent survey conducted by Purch, a digital publishing company that serves the businesses owner community. When respondents were asked what specific factors threatened their long-term success, 32 percent cited taxes.
Meanwhile, other organizations are opposed to the tax overhaul, including the National Association of Realtors, citing concerns that it believes would adversely impact the housing market and consumers desire to enter it. Still, the NAR does concur that "major reforms are needed to lower tax rates and simplify the tax code."
Much like deciphering the tax code, forming a business can be a difficult undertaking. In fact, taxes and business development often intersect, particularly as it relates to deciding on a business structure, be it a corporation, sole proprietorship, partnership or LLC.
The Law Offices of Donald W. Hudspeth, P.C. have the time-tested experience to help business owners not only get their companies up and running, but understand what the costs and benefits are of each designation and how they align with long-term goals.
This post was written by