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Women in Biz to Senate: Tax Reform Can Improve Fairness for Women-Owned Businesses

Tuesday, July 18, 2017  
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For Immediate Release:  July 18, 2017

Contacts:
Erin Musgrave,
erin@emcstrategies.com, (530) 864-7014

Women Entrepreneurs to Senate: Tax Code Overhaul Offers Opportunities to Improve Fairness for Women-Owned Businesses

 

Washington, D.C., July 18, 2017 — In response to a call by Senate Finance Committee Chairman Orrin Hatch (R-Utah) for public input on improving the American tax system, Women Impacting Public Policy (WIPP) submitted a statement Monday urging Congress “to enact a plan that creates a level playing field for women-owned small businesses and allows them to invest earnings into growing their businesses and creating more jobs.”

 

WIPP President Jane Campbell argued that three key reforms will give women-owned businesses a boost: simplicity, fairness and a thorough review of the effects of the tax code on women-owned businesses. Simplifying the code, reforming tax rates and eliminating certain taxes could improve fairness for women business owners and reduce frustration among small business owners who are struggling with higher rates and steeper costs of compliance than large businesses. 

 

“Women business owners are a burgeoning economic force,” Campbell wrote in the statement. “A tax system that will help us thrive and succeed is good for the economy.”

 

Women-owned businesses have more than doubled in number—from 4.1 million to 10 million—since Congress last overhauled the tax code in 1986. Women-owned businesses represent more than a third of all U.S. firms, employing 8.4 million people and accounting for $1.4 trillion in revenues. Yet, the complexity of the tax code has resulted in a disparate impact on women businesses.

 

In fact, 90 percent of all businesses in the U.S. are pass-through entities and 90 percent of women-owned businesses are small businesses. At the federal level, these

 

businesses are subject to a top individual rate of 39.6 percent, in addition to state and local taxes, which can raise the tax burden as high as 43.4 percent.

“In lowering the tax rate, Congress must consider all formations of businesses, including the millions of pass-through entities that pay business taxes as individuals,” Campbell said. “There must be equitable comprehensive reform for all types.”

 

There are other steps Congress could take to help women business owners. When WIPP asked members to identify solutions for how to simplify the tax system for business owners, members cited a need for changes in accounting methods and free tax assistance clinics for small business owners similar to the Volunteer Income Tax Assistance (VITA) program that assists individuals who make $54,000 or less.  

 

Any tax overhaul should include the repeal of the Alternative Minimum Tax (AMT) because it no longer serves the original intent of ensuring that high-income individuals pay at least some income tax. And reform should also include repeal of the Estate Tax, which would allow businesses to pass from one generation to the next to reduce the burden on small business owners and give them additional capital to grow businesses and create jobs.

 

Finally, recent research conducted by American University’s Kogod Tax Policy Center, which drew on a survey of 515 WIPP-affiliated women business owners nationwide, showed the majority of those business owners do not fully benefit from key tax code provisions.  

 

“While Congress intended that these expenditure provisions would stimulate small business access to capital or investment, the effect was that most women-owned businesses are excluded from three of the four provisions studied,” Campbell said. “This study also found there is a dearth of government research into how women business owners use the tax code. This means Congress cannot make evidence-based tax policy decisions to help women-owned firms.”

 

Campbell said that, although firms are sized and organized differently, the majority of businesses—and the kind of industries that often attract women business owners—are not favored by the tax code or tax rates.

 

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About WIPP

Women Impacting Public Policy (WIPP) is a national nonpartisan organization advocating on behalf of women entrepreneurs—strengthening their impact on our nation’s public policy, creating economic opportunities, and forging alliances with other business organizations. www.WIPP.org

 


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