Issues & AdvocacyFederal
WHERE THEY STAND:
THE CANDIDATES ON THE ISSUES
By Andrew Goldberg, Managing Director, Government Relations & Outreach
Rising above the din of political partisanship and discord in Washington has been a recurring call for reform of the federal tax code. Echoed by the leaders of both parties and the chairs of the congressional tax-writing committees, this call for reform appears to have the bipartisan support needed to move forward. In fact, both parties have included a commitment to tax reform in both of their platforms, identifying core principles upon which they will base their reform proposals as the time draws near.
The last major reform of the tax code was in 1986. Comprehensive tax reform could impact nearly all American taxpayers and businesses, changing the rates they pay taxes and which deductions and credits they can claim.
Even before tax reform takes place, policymakers in Washington will need to address whether to extend or end the 2001 and 2003 tax cuts (commonly known as the Bush tax cuts), which are schedule to expire at the end of 2012.
IN THEIR OWN WORDS
OBAMA. As stated in the Democratic Party’s 2012 platform, “[w]e support allowing the Bush tax cuts for the wealthiest to expire and closing loopholes and deductions for the largest corporations and the highest-earning taxpayers. We are committed to reforming our tax code so that it is fairer and simpler, creating a tax code that lives up to the Buffett Rule so no millionaire pays a smaller share of his or her income in taxes than middle class families do.”
The platform also states that “We are also committed to reforming the corporate tax code to lower tax rates for companies in the United States, with additional relief for those locating manufacturing and research and development on our shores, while closing loopholes and reducing incentives for corporations to shift jobs overseas…We support expanding and making permanent the Research and Experimentation Tax Credit.”
ROMNEY. According to the 2012 Republican platform, “Our goal is a tax system that is simple, transparent, flatter, and fair. In contrast, the current IRS code is like a patchwork quilt, stitched together over time from mismatched pieces, and is beyond the comprehension of the average citizen. A reformed code should promote simplicity and coherence, savings and innovation, increase American competitiveness, and recognize the burdens on families with children.”
The platform continues, “To that end, we propose to: Extend the 2001 and 2003 tax relief packages—commonly known as the Bush tax cuts—pending reform of the tax code, to keep tax rates from rising on income, interest, dividends, and capital gains; Reform the tax code by reducing marginal tax rates by 20 percent across-the-board in a revenue-neutral manner; Eliminate the taxes on interest, dividends, and capital gains altogether for lower and middle-income taxpayers; End the Death Tax; and Repeal the Alternative Minimum Tax.”
Specifically relating to international businesses, Republicans seek “a reduction of the corporate rate to keep U.S. corporations competitive internationally, with a permanent research and development tax credit, and a repeal of the corporate alternative minimum tax. We also support the recommendation of the National Commission on Fiscal Responsibility and Reform, as well as the current President’s Export Council, to switch to a territorial system of corporate taxation, so that profits earned and taxed abroad may be repatriated for job-creating investment here at home without additional penalty.”
THE AIA’S TAKE
According to its policy and position statements, “[t]he AIA supports governmental policies, programs, and administration that promote a fair tax code and business regulations that encourage the free enterprise system and the economic well-being of the American people, the U.S. construction industry, and the profession of architecture.”
There is a very wide variation in the tax statuses and rates that architects, their firms and their clients pay, making it nearly impossible to identify reform ideas that are optimal for all AIA members. However, the AIA is taking steps to ensure the preservation of the economic well-being of the design and construction industry as a whole by working with industry allies, the Administration, and Congress to address industry concerns as tax reform progresses. In particular, the AIA opposes tax proposals that would single out architects or their industry for tax increases.
Finally, because approximately 80 percent of U.S. architecture firms are organized as pass-throughs like S corporations, partnerships and sole practitioners, the AIA strongly believes that comprehensive tax reform must treat these businesses fairly.
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