Statement for the record by the Coalition for Fair Effective Tax Rates
May 18, 2017
The Coalition for Fair Effective Tax Rates appreciates the opportunity to provide this statement in support of your effort to reform our nation’s tax code. In short, our coalition encourages you to pursue comprehensive tax reform and to view its progress through the lens of effective tax rates, the amount that businesses actually pay in taxes expressed as a percentage of their income.
The Coalition for Fair Effective Tax Rates is a diverse group of national, regional and state associations representing more than 1,500,000 businesses, large and small, that support comprehensive tax reform. Our coalition is bound together by the belief that rates should be reduced for both corporations and pass-through entities and that now-wide disparities in effective tax rates paid by various industries should be eliminated.
The coalition believes that our federal income tax code is broken and must be overhauled. The tax system should be simplified and the tax base broadened to generate greater economic activity and job creation. To accomplish that, we believe that tax rates should be lowered for corporations as well as the vast majority of businesses that pay taxes through the individual rate system.
Large disparities exist between the amount of taxes paid by various industries regardless of how the companies are organized. Successful reform should be measured by lawmakers’ ability to create a more level playing field for businesses of all sizes across all industry sectors based on effective tax rates.
The current disparity in effective tax rates paid by different U.S. industries is huge. According to the U.S. Treasury, effective actual federal corporate tax rates paid between 2007 and 2010 ranged from 30.3 percent to 14.5 percent. The gap is not only unfair to high-effective-rate-paying companies, it is hurting our economy by distorting the allocation of investment among industries and artificially subsidizing certain industries while penalizing others because tax preferences disproportionately favor one set of companies over others.
This fact should be a fundamental guide for your committee’s reform efforts. Entities should not pay radically different amounts of tax if they earn roughly the same amount of money. This is not just a matter of fairness, it’s also about having a tax policy that is economically sound.
Thank you in advance for pressing forward with comprehensive tax reform.
Management Committee, Coalition for Fair Effective Tax Rates:
Associated Builders & Contractors
Associated General Contractors
International Foodservice Distributors Association
International Franchise Association
National Association of Wholesaler-Distributors
Small Business and Entrepreneurship Council