WASHINGTON – United States Senator Mary L. Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship, held a roundtable Wednesday entitled “Small Business Tax Reform: Making the Tax Code Work for Entrepreneurs and Startups.” The roundtable was designed to give small businesses a voice in the tax reform debate. Sen. Landrieu and members of the committee heard from small business owners, policy experts and an official from the Department of Treasury to get their input on making tax reform work to increase the number of startup businesses and help existing small businesses thrive.
Sen. Landrieu was joined by the committee’s Ranking Member, Sen. James Risch, R-Idaho, and committee members Sens. Jeanne Shaheen, D-N.H., Mike Enzi, R-Wyo., and Tim Scott, R-S.C.
“The roundtable’s participants represent a wide spectrum of small businesses and owners and this committee is a place for their voice to be heard,” Sen. Landrieu said. “This committee is a platform for small businesses in the Senate and this discussion is in line with this committee’s long tradition of working to enlighten and inform the Senate on matters of concern to small business.”
Participating in the roundtable were Vice Chairman of the Angel Capital Association in New Orleans Mike Eckert, President of The ESOP Association Michael Keeling, Professor in the College of Business at San Jose University Annette Nellon, Director of Tax Policy Studies at the CATO Institute Chris Edwards, Owner of Zinman Accounting, Sandy Zinman, President and CEO of Freeland Construction Company, Inc. Kenneth B. Canty, President and CEO of the National Association for the Self-Employed Kristie Arslan, President of Women Impacting Public Policy Ann Sullivan, Director of Business & International Taxation for the Office of Tax Policy at the U.S. Department of Treasury William Rudolph, President of the Tax Foundation Scott Hodge and General Manager of Brown Rental Inc. Greg Nelson.
During the roundtable, Sen. Landrieu led a discussion of numerous tax reform ideas, including getting input from participants on the principles of tax reform laid out by Sen. Baucus and the Chair of the House Ways and Means Committee, Rep. Dave Camp, in a Wall Street Journal Op-ed on April 8. Those three principles are:
- Protect the middle class and ensure taxes are not increased for working or middle class families;
- Level the playing field for U.S. employers to ensure tax reform makes our companies more competitive in the global economy;
- “Parity for small business” to ensure that any tax reform plan does as much to startups and family businesses as it does for a large company.
Participants agreed that simplicity should be a guiding principle for moving forward with tax reform.
“There are few matters more important to small businesses than the taxes they pay and the record keeping necessary to support those filings,” Senator Landrieu said. “Small business owners operate in a ‘do-it-yourself’ economy. Let’s have a tax code that helps them do it.”
“If you cannot describe in a few simple sentences how a rule works or it requires alternative calculations, the rule is not simple and either needs to be revised or repealed,” Professor Nellen said.
Participants also agreed that any reformed tax code should retain a generous and modernized I.R.C. Sec. 179 provision, which currently allows small businesses to immediately write-off expenses for tangible personal property and certain improvements to leasehold property and retail property.
Another focus of the participants was how the tax code can help small businesses have access to capital. Mr. Eckert noted that in 2012, angel investors invested $23 billion in approximately 67,000 early-stage companies, and that angel investors provide seed-stage equity at a rate that is 20 times the number of companies finance by venture capital. Participants supported the idea of enhancing I.R.C. Sec. 1202, which allows small business investors to exclude 100% of the gain from the sale of stock of qualified small businesses if the taxpayers held the stock for 5 years and is vital to continuing to incentivize angel investors. Ideas for modernizing Sec. 1202 included shortening the 5-year holding period and expanding the provision to include investments into LLCs.
Sen. Landrieu held the roundtable in response to a letter sent a letter to all Senators by Senate Finance Committee Chair, Max Baucus, D-Mont., and Ranking Member, Orrin Hatch, R-Utah, requesting “ideas and partnership to get tax reform over the finish line.” Sen. Landrieu will share the ideas and suggestions gathered during the roundtable with the Senate Finance Committee.
For hearing video click here.