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Main Street is the heart of our economy and a better tax code will help it beat stronger. American small businesses have outgrown the tax code thanks in part to ever changing technology and new forms of business. 

Small firms are a unique phenomenon because they do not fall neatly into our tax code. Some are taxed at corporate rates and others at the individual rates. Some receive great benefits from provisions like Section 179 expensing. Others find more value in the start-up deduction. These differences matter when we talk about small business tax reform. 

Unfortunately, not everyone understands such nuances. That was made abundantly clear by the framework released last week by the Administration and Republican leadership. 

That plan ignores the fact that approximately 86 percent of pass-through entities are already taxed at rates lower than 25%.  Though we don’t have a clear picture of exactly what incentives will be removed from the tax code to help pay for this costly plan, we do know that many of them will be at the expense of small firms. 

That is why today’s hearing is so timely. It not only gives us the opportunity to discuss tax reform from the perspective of small employers, it gives this Committee a chance to show how real bipartisanship can help small firms thrive. 

I have had the pleasure to work with the Chairman on H.R. 3717 and believe it does what the Administration’s framework didn’t – provide thoughtful modifications to simplify the code for our nation’s entrepreneurs. 

H.R. 3717 considers the changing nature of our economy by allowing for more flexibility for micro-entrepreneurs in the sharing economy. It is important that as this technological revolution advances, government policy keeps pace.  And this is a first step. 

This bill also makes it easier for entrepreneurs to access health care and streamlines reporting requirements. At first glance, these minor changes may not seem as important as lowering tax rates.  However, they offer valuable, targeted ways to give small employers what they have continually requested – simplicity and certainty.

Yet, we could go a step further to improve the tax code for job creators as we work toward comprehensive tax reform. Congress should look at increasing the start-up deduction to offer benefits to entrepreneurs in the service industry and encourage clean energy investment where small innovators are leading the way.

But, we cannot do this without input from small business owners. These entities are a vital part of that equation. It is my hope that today’s hearing will allow us to start a dialogue and begin the bipartisan process of building a better tax framework for our country’s small firms. 

On that note, I thank the witnesses for testifying and providing their valuable perspective.