Column: Tax reform good for Michigan

Klint Kesto and Robert Kosowski

While bitter partisanship grips our nation’s capitol, here in Michigan, we still know how to work together to get things done for the people we represent.

As two lawmakers of opposite parties, we don’t always agree on the issues. But we do believe the best way for elected officials to serve their constituents is through a dedication to positive, bipartisan action. In this spirit, we will soon introduce a resolution that resolves that the Michigan House of Representatives “supports the passage of comprehensive federal tax reform legislation in 2017.” We strongly urge members of Michigan’s congressional delegation of both parties to work together to make this a reality.

Our resolution focuses on small businesses, because they are the backbone of our state, local and national economies. Michigan’s 856,352 small businesses represent more than 98 percent of all businesses in the state, employ 1.8 million Michiganians (more than 50 percent of all the state’s employees), and account for 80 percent of Michigan’s exports. Tax reform is needed because the current federal tax code is outdated, overly complex, and stifles small-business growth and job creation in our state. At the same time, for most — if not all — small businesses, federal tax compliance is an unaffordable expense, one which costs the U.S. economy more than $400 billion each and every year.

Perhaps most importantly, however, Michigan’s small businesses can face combined state and federal marginal tax rates as high as 40 percent. That’s significantly higher than most of our competitor nations — in fact, the U.S. has the highest corporate tax rate in the industrialized world. This rate makes it extremely difficult for U.S. businesses to compete with rivals in other, more tax-friendly nations. Two-thirds of U.S. small businesses cite over-taxation as their main obstacle to growth, according to a recent poll from the Job Creators Network.

Congress needs to move swiftly to remedy this situation, which threatens to stall the U.S. and Michigan economies in positive, but by no means robust, growth for the foreseeable future. What is needed, as we call for in our resolution, is bold congressional action that “modernizes the code to be simpler with fairer rates in order to alleviate the burden our current code places on our small businesses, which will allow these companies to increase in number, hire more Michiganders, and improve Michigan’s overall economy,” as well as the rest of the nation’s.

The majority of both parties in Congress agree our tax code is broken and needs reform. The devil will be in the details. But we cannot let political infighting, parochial interests, or petty rivalries stop tax reform from advancing in this session. It’s time for our lawmakers in Washington to refocus their efforts to tax reform. Supporters of tax reform in Congress like to say we can’t miss this “once-in-a-generation” opportunity. We agree, and so do small-business owners. Let’s give the United States a 21st century tax code that allows small businesses to thrive, grow, and create jobs.

Reps. Klint Kesto, a Republican, and Robert Kosowski, a Democrat, represent the 39th district and 16th district, respectively, in the Michigan House of Representatives.