Small Business Committee Chairman Sam Graves (R-Mo.) said in a recent editorial that the complex federal tax code needs a thorough overhaul and it is essential that small businesses not be overlooked during this process.
Graves said President Barack Obama proposed a corporate tax cut on July 30 that small businesses would not benefit from.
“The fact is that comprehensive tax reform that includes reform of individual rates would benefit everyone,” Graves said. “If a large corporation is better off with lower taxes, then it’s reasonable to suggest that a small firm is also better off with lower taxes. … If a lower rate for a big company is good for the economy and creates jobs, then likewise a lower rate for a small business is better for the economy and job creation.”
Graves said the current tax laws are growing increasingly complicated. He said the federal tax code is nearly 4 million words long and the code has been changed approximately 5,000 times since 2001, placing an onerous burden on taxpayers. The National Taxpayer Advocate issued a warning in January that compliance is becoming more of a challenge each year.
“This complexity hits small businesses hard,” Graves said. “According to the 2013 Small Business Taxation Survey from the National Small Business Association, nearly 40 percent of owners report spending 80 hours or more per year on federal taxes — that’s two full work weeks spent just on federal taxes. Keeping up with requirements and changes takes time and expertise, all while running a business, often working long hours and worrying about budgets, payroll and inventories.”
Graves said the IRS would also benefit from tax code reform by spending less time, money and manpower tracking down those who did not pay their taxes properly.
“The code itself should be shortened and simplified, forms should be streamlined, many loopholes and disparities should be eliminated and rates should be lowered,” Graves said. “All Americans should benefit from the comprehensive process, and there should be plenty of room for bipartisan agreement on many of these principles.”