Small Business Advisory Council

Yesterday, I was privileged to attend the Small Business Advisory Council meeting hosted by Congresswoman Ginny Brown-Waite at the Jerome Brown Center in Brooksville. Guest speakers for this meeting were Bob Carroll, Deputy Assistant Secretary for Tax Policy, United States Treasury and Tom Wright, Executive Director for Americans for Fair Tax. Congresswoman Brown-Waite opened the meeting with brief comments which included information on small business and the need for tax reform. Before Ginny introduced Bob Carroll of the US Treasury, she made it clear that this was an informational meeting only, and not a debate between speakers. Mr. Carroll's presentation included discussions on the estate tax, health care costs and tax reform. Mr. Carroll outlined the Alternate Minimum Tax from its inception in 1966, and offered some suggestions to improve this system, like indexing this tax. Mr. Carroll discussed the Marriage Relief Act of 2001 which is set to sunset in 2010 and the need to make this (act) permanent. Bob Carroll discussed the need for future tax reform to have large corporate investment here, not overseas, and the aspect of small business having opportunities to re-invest to promote economic growth within our country. Mr. Carroll briefly discussed high health care cost and the Bush administration looking at initiatives to give individuals the same tax advantages for deductions and credits under health care savings plans as business. On the estate taxes, Mr. Carroll, and Ginny, stated that the House of Representatives had passed a repeal of this tax but it did not clear the Senate. Congresswoman Ginny Brown-Waite then introduced Tom Wright to give his presentation. Mr. Wright indicated that the Fair Tax idea is a national retail sales tax, currently estimated at the rate of 23% to 25%. This tax would be in addition to any imposed state sales taxing system. This national sales tax would replace the personal tax, estimated tax, social security tax , self-employment tax, etc. Mr. Wright indicated that this single rate was revenue neutral and replaces, dollar for dollar, the current system of taxation estimated at 23-25%. Ginny interjected that the estimated rate was more to the degree of 32-33% but would have to be determined through independent analysis. Mr. Wright stated that the Fair Tax would be imposed on all new goods and services. Discussion then ensued on the demise of former Governor Martinez for the imposition of sale tax on services under his administration. Mr. Wright stated that his Fair Tax concept was a tax on consumption, such that, the more one spends, the more tax someone would pay into the system. The Congresswoman then opened the presentation up to floor questions. One gentleman posed a question about the chances of having the Fair Tax pass. Tom Wright indicated that he currently had 60 co-sponsors and was 100% sure this would pass. Bob Carroll took the conservative approach stating that fundamental reform is needed and he looks forward to the discussion. Congresswoman Ginny Brown-Waite said that basic simplification of the tax system is needed and she foresees the Fair Tax passing in either the House, or Senate, in the years to come. Ginny emphasized that the chance of passing will depend on any harmful effects that this system may have on constituents. She also stated that public hearings are necessary to hear all sides of this issue which would include independent analysis of all the presented data. As a small business owner, I felt that Mr. Wright's presentation had considerable flare but was very short on substance. Nothing of substance was included to say how items like Social Security would be funded for those of us that have paid into the system, nor the matching amount required to be paid in by currently by employers. Mr. Wright's stated his idea of eliminating personal taxes from payroll would free up business but neglected to include the paper work nightmare of collecting a national sales tax, in addition to state sales tax (for business). In our society which is driven on the basic principals of supply and demand, any tax on that consumption could virtually damage our economic growth. Congresswoman Ginny Brown-Waite was right in stating the need for public hearings to examine all the facts on tax reform for our country to protect the interests of everyone.