The hearing will come to order. Good morning and thank you for joining us for our hearing on the Ways & Means Small Business Tax Reform Discussion Draft.
In March 2011, the Select Revenue Measures Subcommittee held a hearing on small businesses and tax reform. We learned that the temporary, complex nature of the tax code was forcing small business owners to invest their time and resources complying with the tax code instead of growing their businesses. The message was clear: simplifying the tax code means more jobs created by small businesses.
Indeed, comprehensive tax reform must result in a simpler, more stable tax code with lower statutory tax rates for small business owners. Today nine out of ten small business owners rely on a tax preparer. There have been over 4,500 changes to the tax code over the last decade. And with the addition of the 3.8 percent Obamacare tax, small business pass-through entities—which pay their taxes at individual rates—will have a top federal tax rate of 44.6 percent. Comprehensive tax reform cannot be limited to an exercise of only lowering the corporate tax rate as the President has suggested. It must also lower rates for small businesses, who employ over 50 percent of the private sector workforce and whose tax compliance costs are 65 percent higher than for large businesses.
The Small Business Tax Reform Discussion Draft is a step forward in creating a better tax code for small businesses. But that’s not to say it can’t be improved upon, and that’s why Chairman Camp released this as a discussion draft: to ensure that through a public, transparent process, stakeholders – including small businesses themselves – have the opportunity to tell us what they need from tax reform to help them create jobs and increase wages for their employees. I’m looking forward to a great bipartisan discussion today. I thank our witnesses for being here and I now yield to Ranking Member Neal for his opening statement.