Too many operators worry about losing customers when they should be more concerned about keeping up with the higher costs of doing business.
This month marks the first scheduled debate among Presidential contenders in what will be a long, drawn out lead up to the next election in November 2016. The chauffeured and charter transportation industries should be looking at tax reform proposals related to small- and medium-sized private businesses. Cobbling together a wishlist would serve as a metric for operators to evaluate tax proposals as well as quiz regulators, candidates and elected officials.
Now, don’t get alarmed. I wouldn’t think of endorsing any candidate so soon. I will say this, however. With 16-plus candidates on the Republican side, look to that partisan realm for more creative ferment on economic and business ideas. The Democrats so far have megastar Hillary Clinton, who has avoided any innovative economic or tax ideas beyond the crusty ole retro-clichés of class warfare, piecemeal handouts, and eating the evil rich [translation: entrepreneurs and business owners]. The party hosts its sideshow quirk squad, most notably socialist gadfly Sen. Bernie Sanders, I-Vermont, and former Maryland Gov. Martin O’Malley. [O’Malley raised Maryland’s taxes so high that he was succeeded by a Republican in one of the bluest states].
So taxes matter, and miracles can happen. Tax policy affects every facet of the economy and business world, as well as overall national prosperity, moods and consumer behaviors. Generally, the higher and more complicated the taxes, the more severe the evasions and perverse the effects. The simpler and cleaner the tax code, the more honesty, accountability and fairness pervades. [The Bible suggests a simple, “flat tax code” with its references to a “tithe,” or 10%. Just sayin’].
For simplicity’s sake, I’d like to sum up a few ideas from two veteran operators I consulted with, Dan Goff and Neil Goodman, who have ready wishlists for more profitable times. Goff, owner of A. Goff Limousine and Bus in Virginia, worked in criminal collections for the IRS 30 years ago. He offers these specifics for operators:
Goodman, owner of Aventura Worldwide Transportation in Miami, relays some broad policy pursuits to help businesses like his: New individual and corporate rate structures, larger standard deduction and child tax credit, simpler taxes on investment income, repeal of the Alternative Minimum Tax, and a permanent R&D incentive.
Simple, exempt, flat and fair seem to be the common threads in all constructive tax proposals. As to specifics from Presidential candidates, I surfed around, but not much. I started with former Hewlett-Packard CEO and 2012 California Senatorial candidate Carly Fiorina, thinking a CEO would propose the most sensible tax policy, but so far nothing on her website. Some candidates refer to broad themes or goals, but no details. Three candidates who post the most chewable tax reform ideas include:
Sen. Marco Rubio, R-Fla.: “Allow companies of all sizes to deduct their expenses and capital investments while integrating all forms of business taxation into a consolidated, single-layer tax. These reforms would eliminate double-taxation on investment, and enable small businesses and startups to compete on a more level playing field against entrenched incumbents.”
Sen. Rand Paul, R-Kentucky, who detailed his “Fair and Flat Tax” proposal in the Wall Street Journal on June 17: A low, broad-based tax of 14.5% on individuals and businesses. Eliminate nearly every special-interest loophole, the payroll tax on workers, and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs. Apply this uniform 14.5% business-activity tax on all companies — down from 40% for small businesses and 35% for corporations. Levy tax on revenues minus allowable expenses, such as purchases of parts, computers and office equipment. Expense all capital purchases, ending complicated depreciation schedules.
New Jersey Gov. Chris Christie (R): Lower tax rates from six to three, with 28% bracket highest; permit full expensing of corporate investments in capital equipment; repatriate overseas profits at lower 8.75% rate; adopt a terriortial tax system that allows profits to be taxed just once in the nation generated.
Whether you are politically red, blue, or shades in between, we can all agree that no party has ever locked down economic prosperity. Democratic Presidents Kennedy, Johnson and Clinton all presided over economic growth, as did Republican Presidents Coolidge, Eisenhower and Reagan.
Obama’s economy has muddled along, with slow growth, a shrinking workforce, higher taxes, and feverish money printing, but also a record-high stock market, rising home values, lower interest rates and easing unemployment. The latest trade authority victory, with help from Republicans, shows the two parties still can cooperate on pro-business policies if they choose. They certainly pulled that off in the 1990s with NAFTA, welfare reform, and capital gains tax cuts.
Set your priorities and listen closely to all candidates. As history proves, economic times and quality of life can improve with the right taxes.
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