I want to welcome our witnesses to this hearing to discuss the taxation of small businesses and pass-through entities as part of a broader discussion on tax reform. There is a window of opportunity to enact comprehensive tax reform, and we must take advantage of it.
Last November, the American people sent a strong message to Washington. They told Washington to stop putting off tough decisions and to start making the decisions that will ensure future generations of Americans will prosper. Whether it be reducing the national debt, ensuring entitlements will remain solvent, or reforming our tax code to encourage growth—saying its too difficult isn’t an excuse anymore. Our current system of taxation was written for an economy that was very different from the competitive, global economy of today.
It’s time to enact a tax code that is competitive with the rest of the world, that is fair, and that is simple.
Small businesses must also be included in comprehensive tax reform. Reforming corporate taxes means only reforming roughly ten percent of federal revenues. That’s not comprehensive tax reform. Many small businesses pay taxes as under the individual income tax rates, as pass-through entities. The last thing we want to do as a part of tax reform is create a situation where we are putting small businesses at a competitive disadvantage. I fear leaving them out of tax reform will do just that.
Small businesses are the engine of growth for our economy. As we move forward with tax reform, the question we must ask ourselves is how do we reform the code in a manner that empowers small businesses to grow and to create jobs.
I look forward to hearing testimony today from our witnesses on these issues.