The U.S. corporate tax rate is the highest in the world. It reaches as high as 40%, when the 35% federal tax rate is combined with state tax rates, according to KPMG.
A recent survey by CIT of mid-market company leaders finds that 84% of respondents say they want Congress to take action on tax reform. Given the sheer depth and breadth of this group, one would think their voice would be heard.
Despite this tremendous impact on our economy, it’s not that simple. “The challenge for middle market firms is that they have not had a voice in tax reform debates or in many of the debates that occur on Capitol Hill,” Dave Kautter, partner-in-charge of McGladrey LLP, told Accounting Today, noting that “the debates end up focusing on the extremes—small and large.”
Kautter suggests they need to be concerned with four critical decisions related to tax reform:
- The first decision relates to process, whether it’s part of a budget reconciliation or common legislative process.
- The next involves whether it will encompass only business and/or individual changes.
- The third is how to tax foreign earnings, whether it should be territorial-based or a minimum tax.
- The final issue is whether it should raise revenue or be revenue neutral.
At least in one survey, middle-market companies have taken a stand. They say the time has come for corporate tax reform.