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STATEMENT

of the

Honorable Nydia Velazquez, Ranking Member

House Committee on Small Business

“Small Business Tax Reform: Growth Through Simplicity”

Wednesday, April 10, 2013

The American marketplace is perpetually evolving.  But while its vibrant nature has spurred growth and innovation, it has also managed to outgrow many tax policies.  As a result, we often come across provisions in need of reassessment.  Such is the nature of our current tax code, which must be reviewed and redesigned to be made simpler and more effective for our nation’s small businesses.

While some of the existing tax policies provide critical small businesses tax breaks, much of the code is riddled with flagrant inequities and unnecessary complexities.  For small firms, this creates an obstacle to success, rather than a means of encouraging growth and job creation.  This Committee is well aware of the challenges created by the Internal Revenue Code and the major complications it has on business planning.

Given that the last major reform of the code took place in 1986, it is clear changes are long overdue and that we cannot go forward without input from small business owners and entrepreneurs.  With that in mind, it is important that we continue our progress towards comprehensive tax reform to spur innovation and stimulate small businesses. Failure to take any action, however, creates greater uncertainty and dampens the outlook for small businesses. 

Comprehensive reform will have immediate benefits for small businesses while also serving our nation’s economic objective of promoting pro-growth policies.  Devoting reform efforts on a complete overhaul of the code supports our nation’s job creators by allowing them to continue hiring and expanding without worrying about annual changes.  

Most importantly, any agreed upon plan must ensure the extension of enhanced business expensing provisions.  This will help to encourage small entities to make purchases now while also putting more money back in their pockets to invest and hire.

One thing is clear as we talk about tax reform – the needs of small businesses must come first.  We cannot move forward without their input and we must fully recognize the impact of how any proposals would affect them. 

Small businesses are the drivers of the nation’s economy and we cannot afford to put the costs of collecting taxes on them.  Instead, we should be working together to help them thrive.  This entails a complete restructuring of the tax code rather than a piece-meal approach.

A corporate-only method disregards the importance of pass-through entities as drivers of the economy.  It would be unwise to ignore their needs during the tax reform debates because when they do well, we all do well.  It is clear that small businesses and our economy can come out winners if we approach the tax reform in a comprehensive manner.

It is my hope that we can address this issue immediately.  If Congress acts quickly, small firms will see many benefits through a fairer and simpler tax code.  The only reason for delay would be to keep a political issue alive.

Today’s hearing will hopefully start an ongoing dialogue between the small business community and policymakers regarding which tax proposals best support the success of small firms.  I believe there exists an opportunity for this Congress to implement long-lasting reforms.  It will also ensure the nation’s long-term economic growth.  I stand committed to working in a bi-partisan way to revise policies that stifle entrepreneurship, innovation, and growth.  

With that, let me welcome Chairman Camp to the Committee, as well as the small business owners who have taken time from their busy schedules to testify today.

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