Small-business representatives ask lawmakers for more certainty in tax code

“It was very helpful that the 2001 tax rates were extended for a two-year period, but we’d like to know either this year or as soon as we can what the rates are going to be beyond 2012,” said Patricia Thompson, the chairwoman of the tax executive committee of the American Institute of Certified Public Accountants. 

“If small-business owners understood what it’s going to be for a five-year period, a 10-year period, they could plan,” added Dennis Tarnay, the chief financial officer for Ohio’s Lake Erie Electric. “That’s what they’re good at. That’s what we need.”

Tarnay and Thompson spoke at a House Ways and Means subcommittee hearing on how tax reform could impact small businesses, as Washington officials continue to discuss how to approach tax reform. (Tarnay appeared at a news conference on the issue as well.)

Lawmakers on both sides of the aisle have called for a more comprehensive tax overhaul, in large part because many small businesses use the individual tax code. 

For its part, the Obama administration seems to have more of an appetite for corporate tax reform, and Treasury Secretary Timothy Geithner has suggested that Congress should examine whether those so-called “pass-through entities” are allowed to pay taxes as individuals.

But both witnesses and lawmakers at Thursday’s hearing of the Select Revenue Measures subcommittee did not appear too fond of that approach.

Rep. Pat Tiberi (R-Ohio), the subcommittee’s chairman, has noted that he believes the corporate tax code should be overhauled. But, he added in his prepared remarks for the hearing, “Reforming corporate taxes means only reforming roughly 10 percent of federal revenues. That’s not comprehensive reform.”

And Robert Carroll of Ernst and Young, another hearing witness, asserted that allowing businesses to use the individual code gave them more flexibility than they might have in other industrial countries.

“I’ve always thought of that as a virtue,” Carroll added. “It allows companies to make the choice that best fits and suits their capital requirements and their management needs.”

But even as committee members from both sides of the aisle expressed interest in making lives easier for small-business owners, they also appeared to acknowledge that tax reform was going to be a tall mountain to climb. 

“I concur with everyone else who said that this is an issue that we all agree on. We just need to figure out how to get there,” said Rep. Mike Thompson (D-Calif.).