PORTLAND, Oregon – Tax reform, once a hot topic in political and business circles, has seen its stock dim somewhat over the past year. But that is about to change. House Ways and Means Committee Chairman Dave Camp (R-Mich.) has unveiled his major plan to rewrite the broken tax code. But perhaps even more important, Oregon’s own Sen. Ron Wyden (D) is sure to take Camp’s bill and produce a version of his own in the U.S. Senate.
Wyden is the new chairman of the Finance Committee, the tax-writing committee in the Senate. In that role, he is one of the most influential members of Congress. As a result, Americans can be confident that tax reform will not fall by the wayside.
Much has already been done to lay the groundwork for the first real tax overhaul in nearly three decades. Former Finance Committee Chairman Max Baucus (D-Mont.) and Camp worked together on the effort for the past two years. Wyden is poised to pick up where Baucus left off and join the push for a fundamental rewrite of the muddled and complicated tax code.
Not only is Wyden a very capable and accessible representative, he is committed to getting comprehensive tax reform through Congress, an especially difficult but praiseworthy undertaking.
Experienced lawmakers like Wyden know that lowering rates and eliminating special interest loopholes will benefit businesses like mine (the commercial cleaning franchise Jani King) that pay taxes through the individual system. As a bonus, it could provide the entire economy with a much needed lift.
Comprehensive reform is needed to create a fairer and more transparent system. Today, about 1.6 million U.S.-based companies pay taxes through the corporate income tax system. The top rate is 35 percent, the world’s highest effective corporate tax rate. In order to remain globally competitive, the U.S. needs to lower that rate in exchange for eliminating certain credits and deductions.
But lawmakers shouldn’t focus on corporate rates alone. They should also consider the 30 million U.S. companies (like mine) that the Tax Foundation identifies as paying taxes through the individual rate system. The franchisees at Jani-King and thousands of other businesses in Oregon are part of that group. The top marginal individual income tax rate of 39.6 percent is higher than the rate paid by the richest companies in America. This means many small businesses like mine pay higher rates than some major corporations. And that’s just wrong.
The economy of my state (and Wyden’s) is driven by small businesses. According to the Small Business Administration, they made up 97.5 percent of all employers in the state and provided jobs for more than half of the private-sector labor force in 2010. Why, then are the businesses that contribute the most to the economy subject to a tax code that hampers their growth? Without reform, the current tax code will continue to prevent businesses like mine from hiring new employees and investing in new technology and equipment.
Thankfully, Chairman Camp has followed through on his promise to reform the code and Oregon can now count on Wyden, someone who recognizes and understands that these disparities are present not only in Oregon but all across America. Oregon’s small business owners are excited to know that someone in Washington is willing, and now has the power, to keep comprehensive tax reform at the top of the congressional agenda.
Freeman owns the Jani King franchise in Oregon and is a member of the Coalition for Fair Effective Tax Rates.