Corporate Taxes on the Decline?
Have the politicians finally come to their senses? Have they finally realized that U.S. corporate tax rates are just too darned high?
Mebbe so. As the new Congress recently convened, encouraging words were heard to emanate from a pol or two. “Tax reform could be a significant boost to our competitiveness,” quoth Representative Eric Cantor (R-VA). “I’m hopeful and expect the president to put some action behind his statements,” noted Cantor, in reference to Obama’s expression of interest in holding “a conversation” this year about lowering corporate tax rates.
As recently noted in The Wall Street Journal, business execs on Obama’s “Export Council,” whose mission is apparently to advise him how to double exports by 2015, have said that the current corporate income tax regime, with its top rate of 35%, puts U.S. companies at a competitive disadvantage in comparison with other countries whose rates are lower. These execs have recommended a new top corporate rate of 20%. “In these difficult fiscal times, we’ve got to do it in a way that means somebody is giving up something,” Obama said at a December meeting of his Export Council. He further predicted a “tough discussion” on offsets, though he said the plan wouldn’t have to be offset “dollar-for-dollar” according to WSJ.
We can hardly wait to see how far this one gets.
Meanwhile, the House Ways and Means Committee held its first meeting on overall fundamental tax reform last week. Chairman Dave Camp commented on the near term tough sledding on this issue: “I am under no illusion that the task before us will be easy. To really reform the tax code in a way that lowers the tax rate, broadens the base, and promotes the competitiveness of American companies, we will need to make some tough choices.”
Recall that Taxpayer Advocate Nina Olson in her 2010 annual report to Congress noted the country’s number one problem: the complexity of the tax code, and observed that the “overwhelming majority of tax breaks by dollar value accrue to large segments of the taxpaying public….virtually every taxpayer will have to give up cherished tax breaks.”
Meanwhile, back to the mundane, day-to-day aggravation of dealing with the IRS, let’s say they have challenged something they claim you did on a return, and you want them to provide you an actual copy of what they’re looking at. You’d think they would just mail or FAX you a copy right off the bat, correct?
Ain’t so – send the blokes a check for $57 (for each tax year’s return copy which you order) along with Form 4506, and be prepared to wait at least sixty days for a response.
So much for simplification.
And finally this week – no need to drop everything and file your 2010 return right away. Seems IRS just won’t be able to get its processing system in order until at least Valentine’s Day. That’s because, of course, they just needed about 60 days to get their act together from the December 17, 2010 signing of the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” which made a few last minute changes.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He is also a contributor to the recently published 14th edition of Tax Savvy for Small Business, published by Nolo. He can be reached at 831-7288, and welcomes comments at firstname.lastname@example.org.