By Nansen Malin
Ten years. That’s how long the United States economy has limped along in a zombie-like malaise, slowly licking its wounds from the financial meltdown of 2008. In this world of global business and trade, the United States simply cannot afford more years of lost economic growth.
Acting as an anchor around the necks of businesses large and small, but especially the small, hangs our federal tax code. At over 75,000 pages, our antiquated federal tax code costs American businesses over 9 billion hours and more than $400 billion each year in lost productivity and compliance expenses. One could point to the weighted tax code as another unnecessary string in the federal government’s pull, but its implications are felt in the most substantive, monetary way among all bureaucratic factors.
Diverting company resources to tax code compliance is a crippling thought. Rather than spending all of that time and money on building things, investing funds, providing services, buying technology or hiring employees, our businesses pay dearly just to figure out how much of their hard-earned revenues they need to send to our federal government. America’s business acumen continually competes with its own tax code, not to mention the challenges faced with finding success in a competitive economy. If only the intentions of our tax code worked to complement our entrepreneurs, instead of working against them.
We have in front of us an opportunity to unleash the full potential of the American entrepreneurial spirit and allow our business community to generate real and sustained economic growth. Federal tax reform will do just that, and it’s why this debate is so important right this moment.
What else is specifically prohibitive in our tax code? One great example is our business tax rate of 35 percent is among the highest in the world. This rate puts America at a substantial disadvantage in the global business economy, creating a side effect that permits foreign goods to be produced much more cheaply and forces companies to look to other countries to operate and expand their businesses. Our economy just can’t keep up.
Lowering the federal tax rate and dramatically simplifying our tax code will unlock hundreds of billions of dollars each and every year, allowing businesses to put those funds to work. In America. If we are to unlock a growth spurt in economic terms, this will be key.
For all of those businesses that don’t yet exist, reforming the tax code to make it less burdensome to start a business would be an encouraging step toward creating a better economic environment. Businesses can instead use more time and resources in a productive manner to take on expansion, make capital investments, or research and develop new products. This type of economic growth creates permanent jobs, increasing wages and raising the standard of living for all Americans.
We cannot afford to spend another decade treading in tepid economic waters. A lower business tax rate and a fairer and more simple tax code are the only tools left that will allow our nation to grow in a sustained, healthy and productive manner. Now is the time for Congress to act.
Nansen Malin is a University of Washington graduate. She is a small business consultant and lives in Seaview. Follow her on Twitter @nansen.