WASHINGTON, D.C., March 14, 2014 –The below letter was sent today to members of the House Ways and Means Committee. The letter expressed appreciation for Chairman Dave Camp’s efforts on tax reform and also expressed concerns that his discussion draft does not adequately address the disparities in effective tax rates paid by all types of businesses.
March 14, 2014
Dear Ways and Means Committee Member:
The Coalition for Fair Effective Tax Rates agrees with Chairman Dave Camp that the federal tax code is broken and that comprehensive, revenue-neutral tax reform is needed, and we appreciate Chairman Camp starting the critical conversation about tax reform with his recent discussion draft.
Our Coalition has always supported comprehensive tax reform that creates a simpler, fairer code across sectors and for all types of businesses — corporate and pass-through entities. While the draft addresses many of these concerns for businesses paying the corporate rate, as a Coalition we are concerned that Chairman Camp’s plan does not adequately address one of the glaring shortcomings of the current tax system: the disparities in effective tax rates paid by all types of businesses.
In particular, we are concerned that the draft’s complicated set of exemptions, surtaxes and wide disparity between the top tax rate for pass-through businesses and corporations will only exacerbate the already wide variance in effective tax rates. Furthermore, tax reform should simplify the tax code, not make it, in certain instances, more complex.
Our Coalition was formed because of a common belief from businesses paying the corporate rate and businesses paying the individual rate that tax reform should be viewed through the lens of effective tax rates, the amount of taxes that businesses actually pay. We think that effective tax rates are the clearest measure of success for a reform that has so many moving parts: rate changes and the elimination of tax preferences. Effective tax rates, in other words, are the bottom line for true tax reform.
For that reason, the Coalition hopes to establish effective tax rate fairness as a vital way to compare policy choices in order to achieve comprehensive reform and address rates of all types of businesses. Reliance on the metric of effective tax rates will bolster the effort to enact revenue neutral tax reform that broadens the tax base while lowering tax rates for corporations, pass through businesses and individuals alike.
Disparate and high effective tax rates hinder job creation, economic growth and the competitiveness of American businesses. Simplifying the tax code in a way that gets effective tax rates down and narrows the effective rate disparity among all industries and business types are keys to the success of any reform.
We ask that the committee to adopt an effective tax rate perspective as the conversation on tax reform continues.
Thank you for considering our request. We look forward to engaging with the committee in the future on these matters.
Management Committee, Coalition for Fair Effective Tax Rates
National Federation of Independent Business, Co-chair
Retail Industry Leaders Association, Co-chair
Associated Builders & Contractors
Associated General Contractors
International Foodservice Distributors Association
International Franchise Association
National Association of Wholesaler-Distributors
S Corporation Association
Small Business & Entrepreneurship Council