It is widely expected that the United States Congress and the Obama administration will begin to tackle business tax reform as early as April. There are at least two competing visions for tax reform, each depending on trading lower rates for fewer tax benefits--or "loopholes"--for businesses. Depending on who you speak to on Capitol Hill, the details and timeframe of tax reform change almost daily.
One thing is quite clear, however: middle-market to large privately held and family-owned businesses, especially those organized as pass-through entities, are at risk of losing substantial tax benefits while seeing their rates rise.
As the fiscal cliff negotiations proved, President Barack Obama was adamant about not extending the 2001/2003 personal tax rates for those in the top tax brackets. In H.R. 8, the final fiscal cliff legislation, the 112th Congress restored the pre-2001/2003 income tax rates on those individuals making over $400,000 a year. A majority of Financial Executive International's private company members and their companies were directly affected by this increase and members are already feeling its impact.
FEI has pledged to help all its members in the upcoming tax reform debate. Major corporations have been preparing to engage Congress on this issue for more than a year. We have observed that going into this fight private and family-held businesses are less prepared and less well represented in Washington.
To remedy this gap, FEI has created a new private company coalition: the Private Companies for Tax Fairness (PCTF). The aim of this coalition is to provide FEI members a seat at the tax reform negotiating table. There are many associations that represent bits and pieces of the concerns facing private companies (although many of these are focused on small businesses), but none that have the sole aim of protecting middle-market to large privately held and family-owned businesses. In order to fill that void and protect the interests of FEI's members, this coalition has been formed.
The PCTF coalition will be staffed by FEI and led by a working group of its active members. It will directly lobby Congress during the tax reform debate and host educational events for elected officials and staff. The coalition will also draft white papers on key legislative issues, hold media interviews, publish op-eds and articles in appropriate press and conduct grassroots operations, including "fly-ins," as well as...