For Immediate Release:
WASHINGTON, D.C., June 9, 2016 – The below letter was sent to the House Tax Reform Working Group urging it to embrace comprehensive tax reform and judge reform through the lens of effective tax rates.
June 8, 2016
Dear Members of the House Tax Reform Working Group:
The Coalition for Fair Effective Tax Rates commends your review of the imbalances in the current U.S. tax code. We believe your analysis is a vital step in the much-needed process of reforming the federal income tax code. We are eager to work with you to achieve this important goal and urge you to embrace reform that is comprehensive in nature.
Our Coalition is a diverse group of national, regional and state associations representing more than 1,500,000 businesses, large and small, united in support of comprehensive tax reform. We believe that tax rates must be lowered for both corporations and “pass-through” entities that pay taxes using individual tax rates. We also strongly believe that disparities in effective tax rates – the amount businesses actually pay in taxes – must be reduced.
The income tax code is broken and in need of comprehensive reform. Simplification and a broadening of the tax base should be priorities in this effort. In addition, tax rates should be lowered both for corporations and for the vast majority of businesses that pay taxes through the individual rate system.
The current tax code is complicated and unfair. Different industries pay very different amounts of taxes even if they report similar earnings. That’s why our Coalition strongly believes tax reform should be viewed through the lens of effective tax rates. True reform should be gauged by lawmakers’ ability to reduce discrepancies between industries in the amounts they actually pay in taxes. Lawmakers should work to create a more level playing field for businesses of all sizes across all industry sectors.
In order for tax reform to be effective, it must address tax laws that impact both corporations and pass-through entities. Addressing one without the other would render any such effort inadequate.
The imbalance in effective tax rates paid by different U.S. industries is enormous. According to the U.S. Treasury, effective actual federal corporate tax rates paid between 2007 and 2010 ranged from 30.3 percent by construction firms, 29.4 percent by service companies and 27.9 percent by wholesaler-distributors and retailers to 17.7 percent by leasing companies and 14.5 percent by utilities. The gap is too large to be ignored, and too large to be fair.
As you continue your work on tax reform, we urge you to keep your focus on effective tax rates, the amount businesses actually pay in taxes.
We look forward to working with you to develop and eventually approve comprehensive tax reform.
Management Committee, Coalition for Fair Effective Tax Rates:
Retail Industry Leaders Association, Chair
Associated Builders & Contractors
Associated General Contractors
International Foodservice Distributors Association
International Franchise Association
National Association of Wholesaler-Distributors
Small Business and Entrepreneurship Council
About the Coalition for Fair Effective Tax Rates:
The Coalition for Fair Effective Tax Rates is a diverse group of national, regional and state associations representing more than 1,500,000 businesses, both large and small, whose mission is to educate Congress and key stakeholders that tax reform should be viewed through the lens of effective tax rates, the amount of taxes businesses actually pay. The Coalition intends to use the metric of effective tax rates to bolster the case for comprehensive tax reform that broadens the tax base while lowering tax rates for corporations and pass-through businesses that pay taxes using individual tax rates. More information about the coalition is available at http://www.faireffectivetaxrates.com/.