Today the Senate Finance Committee held a hearing to explore options for business tax reform and to consider the findings of the committee’s bipartisan business income tax working group. In his opening statement, Senate Finance Committee Chairman Orrin Hatch (R-UT) encouraged the committee to consider “corporate integration,” which means eliminating double taxation of certain corporate business earnings. Citing the business tax working group’s report, Chairman Hatch noted that corporate integration “would reduce or eliminate at least four distortions built into the current tax code: (1) the incentive to invest in non-corporate businesses rather than corporate businesses; (2) the incentive to finance corporations with debt rather than equity; (3) the incentive to retain rather than distribute earnings; and (4) the incentive to distribute earnings in a manner that avoids or significantly reduces the second layer of tax.”
Prior to the hearing, Ranking Member Ron Wyden (D-OR) released proposed legislation that would simplify capital depreciation rules by replacing the current Modified Current Cost Recovery Program (MACRS) and Alternative Depreciation System (ADS) systems with a pooled depreciation system for personal property, condensing the more-than 100 current depreciation schedules with six depreciation “pools.” The summary of the proposed legislation notes that the proposal “would radically simplify one of the most complex areas of today’s tax code and remove current barriers to businesses reinvesting in machinery and equipment on a revenue neutral basis, while maintaining accelerated depreciation.” In his statement at the hearing, Ranking Member Wyden argued that his proposal is “based on common-sense and a realistic appreciation of how businesses operate today.”
Several witnesses also made statements, which can be found below:
- Mr. Thomas A. Barthold
Chief of Staff, Joint Committee on Taxation
- Dr. James R. Hines, Jr.
L. Hart Wright Collegiate Professor of Law; Richard A. Musgrave Collegiate Professor of Economics, University of Michigan at Ann Arbor
- Mr. Sanford E. Zinman, CPA, PC
Owner, Sanford E. Zinman
- Ms. Gayle Goschie
Vice President, Goschie Farms, Inc.
- Dr. Eric Toder
Institute Fellow and Co-director, Urban-Brookings Tax Policy Center