A small business owner told lawmakers earlier this week that his company spends $14,000 each year to comply with the federal tax code, representing the largest barrier to entrepreneurship.
Tim Reynolds, business owner of Tribute Inc., a software company in Ohio, told the House Business Committee on Wednesday that in addition to the thousands of dollars he spends on accountants to prepare taxes, his company spends about 40 hours a year filling out tax forms and making payments in order to comply.
Reynolds, who also testified on behalf of the National Small Business Association, a group that represents more than 65,000 members, said that 68 percent of businesses spend more than $1,000 a year on federal taxes.
"More than half say that federal taxes have a significant to moderate impact on the day-to-day operation of their business," Reynolds said. "Weighing in at more than 70,000 pages, the tax code punishes work, investment, risk-taking, and entrepreneurship."
"The tax code is unfair to small businesses, biased against savings and investment, and impossibly complex," he said. "A tax system dedicated to investment, savings, and small business growth must be put in its place."
Even though Reynolds has a master's degree in business administration and runs a business that sells accounting software, he says he sees it as an irresponsible risk to do the taxes by himself because he feels he would inadvertently run afoul of the law due to the tax code's complexity.
At the hearing, chairman of the committee Steve Chabot (R., Ohio) touted the Republicans' House agenda for tax reform unveiled last June called "A Better Way."
"In the coming weeks and months, Congress will have a once-in-a-generation opportunity to pass comprehensive tax reform, the likes of which we have not seen since Ronald Reagan's historic tax reforms in the 1980s," said Chabot. "America's entrepreneurs are crying out for tax relief, and we are listening to them as we take action."
"They want a tax code that is simpler, fairer, and flatter so they can start and grow their businesses and turn their dreams into reality," the congressman added. "Fortunately, with the Better Way agenda as our roadmap, we will do better."