As a voice that has long represented minority owned businesses in the U.S., the National Black Chamber of Commerce believes strongly that comprehensive tax reform can help revive the national economy.
Owners of minority businesses, like all American entrepreneurs, have languished under a tax scheme that is among the world’s most repressive, levying combined federal and state tax of nearly 40 percent in some cases. After 30 plus years without real reform, the time for action is now.
The tax reform framework recently offered by the Trump Administration and Congressional leaders would provide real and immediate relief. Under this plan, the corporate tax rate would fall to just 20 percent, bringing the U.S. closer in line to competitor nations.
This would be a shot in the arm to our economy, establishing a foundation for growth and expansion. Importantly, the framework would also slash the maximum tax rate for all small businesses, partnerships, and S corporations to 25 percent, their lowest rate since the end of the Second World War. Even better news is on the horizon as the House and Senate plan to release tax reform legislation in the near future.
This is the kind of deep tax relief that Michigan businesses sorely need. From my tenure at Johnson & Johnson in Detroit and from my discussions with minority-owned businesses in the state, I understand that the tax reforms proposed by President Donald Trump would be a key ingredient to getting Michigan back on track. That is why it is critically important that senior leaders in Washington like Sen. Debbie Stabenow roll up their sleeves and fight alongside their colleagues to pass reform this year.
Today, high corporate taxes imposed by our broken tax code saddle U.S. businesses with an incredible $263 billion in annual economic burden. Much of this burden — about two thirds according to federal estimates — is borne by working people. In other words, our outdated tax code doesn’t just hurt businesses; it holds back working families. The tax reform plan laid out by the president starts to reverse that — economist Ike Brannon, found that decreasing the corporate tax rate by 10 percent would lead to employment gains of up to 4 percent and a 5 percent increase in wages. We would all benefit from these critical reforms. The White House Council of Economic Advisers has gone further and calculated that a 20 percent corporate tax rate would contribute to increased income of $4,000 per year for the average Michigan household.
As Michigan’s lawmakers in Washington consider this reform package, it is important that they avoid unfairly targeting certain industries in the process. Some have suggested, for example, that the energy industry pay higher taxes or be denied certain provisions under the tax code. This would be a grave mistake for the American economy. Not only does targeting the energy industry raise the threat of higher prices for oil, gasoline, and other energy products, but doing so also endangers millions of American jobs.
The energy industry is a shining star in a struggling American economy, driving innovation and investing tens of billions of dollars each year in our infrastructure. Energy companies are also some of the nation’s biggest taxpayers, with the two largest tax bills among individual American companies — and three of the top 10 — coming from the energy sector. Killing the goose that laid America’s golden egg is a poor approach for kick-starting the economy and lifting all businesses into prosperity.
The people of Michigan should take great interest in the president’s tax reform plan. Businesses will see new growth. Working families will see higher wages and more opportunities. Robust sectors like energy will continue to grow. If Michigan’s leaders in Washington really want to help the businesses and workers of their state, they will give this proposal for comprehensive tax reform the close attention it deserves.
Harry C. Alford is founder and president of the National Black Chamber of Commerce.