Small biz: Tax reform must be comprehensive

Small business groups are telling Congress they don’t see how to overhaul the tax code without dealing with the individual tax system.

“To ensure that tax reform results in a simpler, fairer and more competitive tax code, Congress needs to reduce top tax rates for all types of taxpayers,” dozens of groups, including the National Federation of Independent Business and the S Corporation Association, told the leaders of the Senate Finance Committee and the House Ways and Means Committee in a letter dated Wednesday.

{mosads}The letter serves as a quick response to Senate Finance Chairman Orrin Hatch (R-Utah) and House Ways and Means Chairman Paul Ryan (R-Wis.), who reached out to the business community this week about tax reform this week. 

Hatch and Ryan sought input on how a tax reform for businesses could help companies that pay taxes as individuals without lowering the top tax rate of 39.6 percent. President Obama has said he’s willing to work with Republicans on business tax reform, but has drawn the line at reducing that top individual rate.

The answer from the groups, some of whom have been longtime supporters of the GOP, underscores the challenges of crafting a business tax reform plan and why many on Capitol Hill are skeptical that any deal will emerge in the current Congress. 

Ryan has said that major tax changes for individuals would likely have to wait until 2017, and that Congress has just a few more months to make progress on business tax reform to have a chance before the 2016 election.