It is fitting that on Tax Day, April 15, we are examining one of the most vexing challenges for small business – our burdensome and incomprehensible tax code.

 

A quote by an unknown source represents the entrepreneurial spirit I have witnessed representing Hoosiers in Washington:  “Small business isn’t for the faint of heart. It’s for the brave, the patient and the persistent. It’s for the overcomer.” 

 

The small business owners I have met are brave, patient, and persistent.  They are indeed overcomers.  Despite the obstacles small businesses face, they are responsible for two-thirds of the net new private-sector jobs created in the United States.  Our role as legislators should be to ensure that the tax code is no longer a major obstacle to growth and jobs for these businesses.

 

Against the headwinds of the slowest recovery since 1960, small business owners have to deal with a tax system that is hopelessly complex, full of provisions that expire every one or two years, riddled with special exemptions, deductions, and preferences, and filled with new penalties.

 

The Small Business Administration lists tax paperwork as the most costly paperwork burden the federal government imposes on small businesses at $74 per hour or $1,500 per employee.  It is not surprising that nine out of 10 small business owners have to turn to an outside paid professional to figure out their taxes. 

Today we will hear from witnesses who can discuss how tax policy is affecting the broad landscape of small businesses.  We will also hear two stories of real businesses that will bring home how taxes affect companies on the ground.

 

We hear these stories every day:

 

• Stories of complexity.  I can sympathize with business owners because I took two tax law courses in law school and am still baffled by the tax code.

 

• Stories of uncertainty, like the farm family unable to replace outdated equipment because they are unsure whether small business expensing or bonus deprecation will be in effect for the year, and at what level.

 

• Stories of manufacturers hit with higher tax bills because the top individual tax rate rose, but without extra cash in the business to pay the tax.

 

• Stories of small businesses struggling under the weight of ObamaCare’s taxes and mandates, wondering if they can afford to add more workers or whether they should move employees to part-time status.

 

• Stories of medical device makers, like one in Warsaw, Indiana, that develops orthopedic implants for children and had to shelve two important projects because of the medical device tax.

 

• And stories of family-owned businesses with land, buildings, equipment or inventory but without cash to pay the estate tax, worried the business won’t survive to the next generation.

 

 

Tax Day is a perfect time to commit to not let another April 15 pass before we finally tackle comprehensive, pro=growth tax reform.  And while it is urgent and essential to lower our corporate tax rate, which is the highest in the developed world, we must not forget the millions of small businesses that pay taxes at the individual level and have just experienced rate increases of their own.

 

I look forward to hearing from our witnesses about how we can tear down barriers to growth in our broken tax code.

*As prepared for delivery