TERRE HAUTE —
A revision in the federal tax code is needed as complicated deductions, especially for large corporations, have resulted in tax disparities, said U.S. Rep. Larry Bucshon, R-Newburgh.
“We are at a point where people, I think, depending on your income level, think that the tax rates are starting to get too high,” Bucshon said. “I would agree with that; however, I would also say the complicated deduction process, one that not everybody has the opportunity to participate in, is a huge problem.”
Bucshon was in Terre Haute on Thursday to participate in the grand opening of a new building for a tax company.
Andy Stadler, president of Stadler & Co. Tax Service, said the company invested $2 million in its new 50,000-square-foot building at the corner of Erie Canal Road and Margaret Avenue,” Stadler said. “We have a phase two that we are wanting to do, which will probably start in the next 12 to 18 months. We will be adding on another 15,000 square feet to the north side of the building.”
Bucshon, after the grand opening ceremony, said complicated tax deductions and tax credits are a disadvantage to small business.
He said Limited Liability Corporations, or LLCs, as well as Subchapter S corporations pay a business tax through the individual “personal tax code. So the corporate tax code really, to a certain extent, disadvantages small businesses because their tax rates could be 391⁄2 percent,” Bucshon said, while a large corporation has a lower rate because of more deductions.
“On the corporate tax side, we need to get the overall rates down for everyone. We need to address the disparities in what small businesses have to pay when they are pass throughs and put them on a more level playing field with larger companies. But also we have to clean out the underbrush in the corporate tax code to make sure that people who owe taxes, pay taxes,” he said.
Tax credits and deductions can result in some larger companies “not to pay an effective tax rate,” he said.
Bucshon said he also thinks the United States needs to become competitive worldwide by establishing a territorial tax system. The idea is to shift from a tax system where U.S. companies pay a U.S. tax on their worldwide income to one where they would pay the U.S. tax only on what they earned in the U.S.
Currently, Bucshon said, when a U.S. company earns a profit in a lower-tax country, on money that has already been taxed, and seeks to move that money back into the United States, the company is taxed again at the higher U.S. rate.
However, multinational companies based in territorial countries pay only the local tax rate on profits. All countries, Bucshon said, have rules to protect their domestic corporate tax base and curb income shifting.
“We have trillions of dollars in profit from U.S.-based companies that is sitting outside our country which can’t be used to expand businesses in the United States. We are the only developed country in the world that does that,” Bucshon said.
“Everybody else has created a territorial tax system to allow their companies to move their profits around through their company,” he said.
“The corporate tax situation is something that is going to have to be addressed if we are going to stay competitive. That is just the reality,” Bucshon said.
Reporter Howard Greninger can be reached at 812-231-4204 or howard.