S Corps Pushing U.S. Senate for Tax Reform
A bipartisan tax reform effort in the U.S. Senate is getting a big push from business and trade organizations to bring tax relief to the millions of S corporations in the nation–mainly small and midsize businesses, including many manufacturers.
Since the fiscal cliff negotiations in late 2012, pass-through corporations–S corporations, partnerships, and sole proprietorships–have been paying significantly higher taxes than C corporations.
This year, Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) formed five bipartisan working groups to study current tax law and help develop a comprehensive tax reform plan in this Congress.
The senators have asked for analyses and potential solutions by the end of May with the goal of legislation to produce “a bipartisan tax overhaul that will provide bigger paychecks, better jobs and more opportunity for all Americans,” said Hatch.
Earlier this month, representatives of S-Corp, an association dedicated to promoting the interests of America’s 4.6 million S corporations, testified before the Senate working groups.
They reiterated three principles of tax reform to benefit S corporations:
- Make tax reform comprehensive, to improve the tax code for individuals, corporations and pass-through businesses alike
- Reduce the tax rates paid by individuals and corporations to similar, low levels. To ensure that tax reform results in a simpler, fairer and more competitive tax code, lawmakers should reduce the top tax rates for all types of taxpayers.
- Continue to reduce the double tax on corporate income by integrating the corporate and individual tax codes and move towards taxing all business income only once.
“By embracing these broad concepts,” said the 118 organizations in a letter supporting the S corporation effort, “Congress can move the taxation of business income in a direction that helps all employers, regardless of how they are organized, to invest and create jobs here in America.”
CBIA supports the efforts of S-Corp. and will provide updates in the Government Affairs Report on progress in the Hatch-Wyden tax reform initiative.
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