US Lawmakers Look To Business For Tax Reform Help

House of Representatives Ways and Means Committee Chairman Paul Ryan (R – Wisconsin) and Senate Finance Chairman Orrin Hatch (R – Utah) have sent a letter to a coalition of small businesses asking for ideas on how to cut the effective tax rate for US pass-through businesses, which pay tax at individual income tax rates. In their April 13 letter to the Coalition for Fair Effective Tax Rates (CFETR), which joins a large number of American small business associations, Ryan and Hatch were looking for input on how the effective tax rate for pass-through businesses could be reduced, while not cutting statutory individual tax rates. Those ideas could be important if only corporate tax reform is able to be progressed in Congress in the foreseeable future. President Barack Obama has so far insisted on this, given that he is against any reduction in the top rate of individual income tax. In that case, a reduction in effective tax rates on pass-through businesses would be necessary to maintain their competitiveness in the face of reduced statutory corporate tax rates. While both Ryan and Hatch have indicated that their preference is for comprehensive tax reform, involving both individual and corporate tax codes, their letter adds that, if "the reality is that the statutory tax rates for pass-through businesses will have to wait until the next President, there are reforms we can enact now that will lower their effective tax rate." CFETR members have been requested to send their comments by May 31, 2015. Source: