As in most states across America, small businesses form the backbone of the Sunshine State’s economy, and account for the majority of our job creators. Hard work, dedication, and long-term planning are the foundational keys to success. So is having a responsive, attentive ally in the U.S. Congress like Florida’s own Bill Nelson, a senior member of the U.S. Senate’s Committee on Finance, which exercises oversight of our nation’s tax code. At a time when Congress appears poised to achieve first-in-a-generation, bipartisan, comprehensive tax reform that lowers the rate, simplifies regulations and treats all industries fairly, we are hopeful for Senator Nelson’s leadership on this issue.
There is universal consensus that America’s tax code is in desperate need for reform, and for very good reason. It has been more than 30 years since the last bipartisan congressional tax overhaul in 1986. Corporate state and federal tax rate combined has hovered at 39 percent, while the complexity of our tax code has multiplied at an alarming rate.
American multinational companies headquartered here, employing millions of our fellow countrymen and women, have been handicapped while competing on the world stage. Their foreign counterparts are taxed at a top global average rate of 22.5 percent, which is down from a 2003 high of 33 percent.
America’s small businesses and subchapter S corporations, pay the personal-tax rate (that can reach more than 44 percent), have been particularly burdened, forced to choose compliance with the onerous tax code over investing in their business products or growing their employee base.
As the only statewide economic development organization dedicated to the Hispanic community, we have 38 individual chapters, serving more than 80,000 minority-owned businesses in Florida. Our members, member companies and partners can attest the current tax code to be a barrier to entry, as well as a strong retardant to investment and expansion. If we want Florida – and America – to once again be a beacon of entrepreneurial pursuit and prosperous self-sufficiency, then we must have a tax code that rewards initiative.
Beyond even the huge monetary burden, compliance itself has had debilitating effect on the U.S. economy. In fact, the non-partisan National Taxpayers Union has quantified the compliance cost to the U.S. economy each year from the federal income tax at a whopping $233.8 billion in productivity, and more than 6.1 billion hours of total labor time.
With this data in mind, it’s no wonder that all conclude comprehensive tax reform is both welcome, and necessary. Fortunately, economic experts have applied considerable time and analysis assessing both the problems, and smart solutions to them. As Senator Nelson and his colleagues in Congress work to revamp our tax code, one such plan stands out for its breadth, fairness, and pro-growth stance: the House Speaker Paul Ryan-House Ways and Means Committee Chairman Brady tax reform blueprint.
Ryan-Brady plan reduces rates (cutting the corporate rate to 20 percent, and the small business rate to 25 percent, the lowest rate since World War II), simplifies regulations, and differentiates between wage income and business income. This would ensure the industry-neutral application of all of it, veering away from attempts to punish certain successful sectors of our economy.
All told, the Ryan Brady plan would, according to the Tax Foundation, “raise American GDP by 9.1 percent in the long run, lift wages by 7.7 percent and add some 1.7 million jobs.” That’s a real prescription for American success.
If Senator Nelson and his fellow members of Congress from both parties are able to achieve comprehensive tax reform that closely mirrors the fair vision of the Ryan-Brady plan, all Americans will benefit from stronger, more sustainable economic growth.
Julio Fuentes is the President of the Florida State Hispanic Chamber of Commerce.
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