Tax reform would benefit local firms, families
Today the United States tax code is a whopping 74,608 pages. According to the National Taxpayers Union, 94 percent of all Americans use tax professionals or tax software to prepare their returns. Our businesses in the Mahoning and Shenango valleys also incur costs, sometimes tremendous costs, associated with complying with those 74,608 pages.
To afford our businesses the opportunities to invest more time and money in their products and services, the Trump Administration and Congress should expeditiously approve the first comprehensive overhaul of the U.S. tax system in more than 30 years. After the reform accomplished in 1986, a period of robust economic growth swept across the nation.
For our valleys’ employers, some basic tenets under discussion in Washington could result in an economic infusion right here. Reducing the tax rate for C-corporations from 35 percent to 20 percent, in addition to capping the top tax rate for small businesses at 25 percent, would enable our companies to create more jobs and pay higher wages. The ability to deduct 100 percent of capital investments for five years creates a more favorable climate for our local manufacturers to reinvest in their operations. It is this type of reinvestment that will protect our existing jobs.
Likewise, incentivizing companies conducting business overseas when returning their investments to the United States would serve as a positive reversal to painful concepts our community knows all too well. For too long our region has suffered as the result of backward policies that punish companies doing business here and rewarding those sending jobs abroad.
For our families, middle-income tax relief and the elimination of special-interest tax breaks means more financial security in the home. Retaining incentives on mortgage interest, retirement savings and education also delivers for our families. A healthier middle class in our region means more activity for our local businesses.
We understand the most laborious work for our federal delegation is just getting started. Our lawmakers face difficult decisions to craft a tax system that stimulates job creation and raises wages. It is essential they act swiftly to continue the economic momentum we are currently experiencing.
While the current tax reform proposal will undoubtedly continue to be tweaked, many points amount to a robust framework from which to work. These particular highlights are especially encouraging:
l Lower tax rates for individuals and families and reducing the number of tax brackets from seven to three;
l Doubling the standard deduction and enhancing the child tax credit;
l Repealing the death tax and alternative minimum tax;
l A lower tax rate for small businesses;
l A corporate tax rate of 20 percent, lower than the industrialized world’s average of 22.5 percent.
The notion of tax reform has arisen at a time when we can use it to capitalize on exciting developments in our region. An American Chemistry Council study released in March indicates the tristate region of eastern Ohio, western Pennsylvania and western West Virginia could, by 2025, see the creation of more than 100,000 new jobs in plastics and petrochemicals. The result of an inexpensive, abundant supply of energy in the Utica Shale, this job outlook does not include other industries that will find our region attractive, especially when accompanied with a reformed tax code.
Several overarching principals must prevail. These include simplification of tax rules to reduce the cost of compliance; permanence stamped on the reforms, so our businesses have certainty in their futures; and sweeping, comprehensive reform, as opposed to untenable piecemeal changes.
Local businesses can rest assured that their Youngstown-Warren Regional Chamber will closely monitor and provide meaningful feedback to our elected senators and representatives so that the vital interests and well-being of our 2,600 members, as well as their employees, are heard loud and clear.
We will analyze all aspects of the proposals, such as eliminating interest deductibility on business investments and doing away with the ability to deduct state and local taxes. As always, we will continue to advocate for proposals benefitting our member companies and against proposals hindering their success.
Dignan is chief operating officer at the Youngstown-Warren Regional Chamber.