Individuals, small business-owners and corporate professionals are aware of the crushing burden represented by our outdated federal tax code, unchanged since 1986. It has been an issue throughout my career at Associated Industries of Florida, and as a third-time business-creator, I am personally dealing with an exceedingly high tax rate, and an onerous regulatory framework that discourage investment and expansion.
The current tax code is bad for working families and bad for the businesses that would like to employ them. Consequently, America is suffering.
The corporate state and federal tax rate combined is at 39 percent. Not only is the corporate rate too high, it also manages to handicap American and Florida-based businesses that sell their products and services abroad, because their foreign counterparts enjoy a top global average rate of only 22.5 percent, which has steadily declined from a 2003 high of 30 percent. Thus, many U.S. businesses have departed our shores for more beneficial tax-treatment elsewhere, and the revenues and jobs have departed with them.
Luckily for small-business owners here in Florida and around the country, Congress and the president seem to finally be turning their focus to complete genuine tax reform rather than, in years past, passing short-term adjustments to the overly complicated current system. The question is, will they get real tax reform done this year?
There are a few proposed solutions to fixing the tax code and setting more fair tax rates; that’s a step in the right direction.
The blueprint created by Speaker Paul Ryan and House Ways and Means Chairman Kevin Brady, for instance, would reinvigorate America’s economy and spur job creation by lowering the corporate rate to 20 percent, slashing the small business rate to 25 percent, and applying all regulations and rates uniformly across all sectors; no more punitive measures for successful enterprise. Just as important, with the institution of a destination-based cash flow tax system, the Ryan-Brady blueprint would also ensure American-made exports no longer face discriminatory tax treatment across our borders. Jobs, revenue, and U.S.-based manufacturing would increase dramatically.
Additionally, in a recent analysis by the Tax Foundation, the House Republican plan would increase U.S. GDP by 9.1 percent and create 1.7 million jobs here in America over the long-term. In Florida alone, the plan would put $4,248 back in the pockets of middle-income households and create 97,220 jobs in the state. To small businesses that make up nearly 99 percent of all Florida employers and who employ 3.1 million Floridians, these are no small numbers.
Whether it is one of the circulating plans by the House Republicans or the recently announced plan by President Trump, it is crucial that the framework Congress decides to work on will grow the economy, create jobs, and allow businesses to compete both globally and in the U.S.
What we have now no longer works and it is time for a tax overhaul that will bring the spirit of entrepreneurism, create incentives for productivity and revitalize our manufacturing sector, so we can compete once again globally. The defense of the status quo will be fierce, but if America is to retain our leadership of the free world, we must undertake this significant challenge.
We must not give up the opportunity to overhaul our complex tax system this year. It has been 31 years since we have addressed meaningful tax reform and America deserves to bring jobs and incentives back to our shores.
Barney Bishop III is a small business owner of Barney Bishop Consulting, LLC, immediate past President of the Associated Industries of Florida and former Executive Director for the Florida Democratic Party; and Panama City is his hometown.