Lawmakers suggested Friday that corporate tax reform could potentially move forward regardless of the fate of a comprehensive tax overhaul, so long as businesses are on board.
Democratic Rep. Jared Polis of Colorado said at the Politico Pro Technology Deep Dive Friday morning that corporate and individual tax reform will have to be separated “if they want to see it go all the way through.”
Polis, a former small-business owner, expressed concern that there will be difficulty among lawmakers over which loopholes to close. Corporate income tax, however, has bipartisan support.
Republican Rep. Aaron Shock of Illinois, a member of the House Ways and Means Committee, agreed, though he noted the caveat that small businesses will also need to get some kind of overhaul.
“Ways and Means Chairman Dave Camp and most Republicans on the panel are adamantly opposed to separating the two,” Politico reports.
Under the current tax regime, small businesses file taxes under the individual code, with the top rate pegged at 39.6 percent. Meanwhile, corporations pay a 35 percent rate. Not addressing the small business tax would be unfair, lawmakers say.
The United States currently has the highest corporate income tax of the developed world, 35 percent. The average for similar countries, members of the Organisation for Economic Co-operation and Development (OECD), in 25 percent.
According to some studies, bringing down the corporate income tax rate could in effect pay for itself, as more corporations would repatriate their money allowing the government to collect more in taxes.
While the Ways and Means Committee is intent upon overhauling the tax code in one fell swoop, Schock explained that the committee could move forward with proposals together.
“To the degree you can find a way to tax the entities and C-corps within the same tax code, you could do corporate reform separate from the individual reform,” Schock said.
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