Business tax executives seem to agree with a majority of congressional lawmakers that tax reform is unlikely to happen this year.
According to the 2014 Tax Policy Forecast Survey, which was released today by Washington, DC-based law firm Miller & Chevalier Chartered and the National Foreign Trade Council (NFTC), not a single one of the 129 business tax executives polled believe tax reform will be enacted in 2014.
“American businesses are looking for significant tax reform that will level the playing field with the rest of the world,” Catherine Schultz, vice president for tax policy at the NFTC, said in a written statement. “Survey results indicate that the distinct partisanship and lack of prioritization by the [Obama] administration has top executives concerned that the worldwide tax system and statutory tax rate will not be reviewed and reformed.”
On February 26, House Ways and Means Committee Chairman Dave Camp (R-MI) released his 979-page tax reform plan. Camp’s proposal to revamp the tax code would, among other things:
- Collapse the current seven individual tax brackets to two: a 10 percent tax rate and a 25 percent tax rate. It also reduces the corporate tax rate to 25 percent.
- Levy a new 10 percent “surtax” against incomes of the wealthiest earners.
- Provide an inflation-adjusted standard deduction of $11,000 for individuals and $22,000 for married couples.
- Increase the child tax credit to $1,500 per child, adjusts it for inflation going forward, and expands the number of families that can claim the credit.
- Mandate that “too big to fail” financial institutions pay a quarterly 0.035 percent tax on their worldwide consolidated assets in excess of $500 billion.
Although most legislators on both sides of the aisle believe there will be no decision made about the overhaul of the tax code before the end of the year, the Ways and Means Committee chairman recently said the public shouldn’t discount the possibility of action.
“I’m not just going to settle for mediocrity,” Camp said during a breakfast sponsored by the Christian Science Monitor on March 5, according to a Bloomberg article. “I’m not going to settle for things the way they are, and I don’t think the American people are either.”
Camp is in his final term as chairman of the Ways and Means panel, and the pending change in tax-writing committee leadership (2.4 percent) is one of the reasons survey respondents felt tax reform was a low priority for the 2014 legislative agenda. Business tax executives also cited Obama administration priorities (40.2 percent) and a split in congressional control (30 percent) as the top two reasons why tax reform won’t be acted upon this year.
Most survey respondents (47.7 percent) are unsure when tax reform will be enacted, while 25.8 percent believe it will become official in 2015. Almost 15 percent believe 2016 will be the year.
Despite the less-than-optimistic view on tax reform in 2014, the survey revealed that Camp is the most influential tax policymaker this year, followed by President Obama and Senator Harry Reid (D-NV).
Business tax executives are more hopeful that the package of 55 tax provisions that expired at the end of 2013 will be extended. According to the survey, 77.2 percent believe the tax extenders will be enacted into law in 2014, followed by specific tax items included as a part of larger pieces of legislation (27.6 percent). Twenty-one percent of respondents do not think there will be any significant tax legislation enacted this year.
Also, half of those polled think the tax extenders package will be enacted sometime between July and December 2014.
About the survey:
In January, Miller & Chevalier and the NFTC distributed a survey via e-mail to leading business tax executives, including vice presidents, directors, and managers of tax, at a broad cross-section of US-based and foreign-based multinational corporations. Industries surveyed include manufacturing, oil and gas, insurance, utilities, financial institutions, automotive, health care, defense, hospitality, and agriculture, among others. The survey was completed by 129 respondents.