Mary Moore Hamrick, Public Policy principal at Grant Thornton LLP, interviewed Rep. Patrick Murphy (D-Fla), accountant and member of the House Committee on Financial Services, on the outlook for tax reform.
Hamrick: Why is tax reform a key factor in stimulating jobs and economic growth?
Murphy: Our current tax system is outdated and complicated, at best. Comprehensive tax reform is the solution to the problems facing families and businesses of all sizes. A key barrier to completing this reform is congressional gridlock. Members of Congress in both parties acknowledge the need for tax reform, but few are willing to engage in the process. There is a window of opportunity to update our tax code, but every day that goes by, the chances decrease. By reforming the tax code, we can lower rates on hard-working families in Florida and across the country, which is one of the biggest economic investments we can make.
Hamrick: As a CPA you have a unique perspective into business. What reforms do you think will have the greatest impact in driving growth for businesses back home?
Murphy: Congress is so dysfunctional right now that it doesn’t allow businesses the ability to plan for the long term. Businesses need stability regarding what tax provisions and programs will be in place a few years down the line so that they can properly plan and make investments. It is the job of Congress to create an environment that is conducive to job growth; the current pattern of governing from crisis to crisis is just not the way to do it. We need both sides of the aisle to come together and demonstrate leadership, and this will enable businesses to grow.
Hamrick: Your constituents consist of small, medium and large businesses as well as businesses formed as corporations and pass-throughs. What measures are lawmakers taking to ensure tax reform treats all businesses fairly? What are you hearing from your constituents?
Murphy: As a prior member of the Small Business Committee and a small businessman myself, I want to make sure that the small business perspective is being represented in Congress. Small businesses make up almost 50% of private-sector jobs, were key to the economic recovery, and are the lifeblood of my district. I have held “Congress at Your Company” events throughout my district and always hear from my constituents about the need for the voice of small business to be heard in Congress, and I have worked hard in Congress to make sure they have a voice at the table.
Hamrick: What provisions or part of tax reform do you see as the biggest tax challenge ahead?
Murphy: Our Congress is often so dysfunctional that leaders from both sides of the aisle often want 100% on an issue, when most of the time we can agree on 80% and move forward. Because of the wide-ranging nature of comprehensive tax reform, it will be a huge challenge to get it passed into law in the near future. From my experience as a CPA, we need a smarter and more efficient tax system that is easier for small businesses to plan for the long term.
Hamrick: Specifically, what tax provisions are most important to you and your constituents?
Murphy: Mortgage debt forgiveness. While we are seeing recovery in the housing market, many Florida homeowners remain underwater on their mortgages. As a result of the financial crisis, Americans lost trillions of dollars in home equity. In most cases, homeowners were forced to turn to short sales rather than face foreclosure. The deduction allowed homeowners to deduct the forgiven loan balance after a short sale or mortgage modification now. Unfortunately, with its expiration, that balance is now classified as taxable income. This deduction has overwhelming support in the House of Representatives, and will help ensure working families and small businesses aren’t still being penalized from the financial crisis.
Hamrick: What tax reform provisions do you see moving forward during this Congress?
Murphy: Congress is working to pass a tax extenders package during this session, which will benefit a range of businesses in numerous industries. However, by waiting until so close to when many of these tax provisions are set to expire or have already expired, it hurts businesses and leaves them with great uncertainty. This uncertainty makes it extremely difficult for businesses to properly plan and invest.
Hamrick: Considering the limited window for reform in this Congress, what role do business leaders play in tax reform at this juncture? How can business leaders help/be a resource to lawmakers during the tax reform discussion?
Murphy: It is crucial that business leaders engage with their member of Congress to let them know the vital need for tax reform, as it is an issue that impacts their growth and their employees. One key way to weigh in is to invite representatives to visit their businesses, allowing them to see firsthand the impact that the business community has on the local economy and hear about the issues, including tax reform, that impact that company.
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
For additional information about the issues discussed, contact a Grant Thornton LLP professional. Additionally, where applicable, the views expressed in this blog are the views of the individuals named and are not necessarily those of their employers or of Grant Thornton LLP. The information provided may not and should not be construed to imply endorsement or support by Grant Thornton LLP or other entities named.
“Grant Thornton” refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd (GTIL), and/or refers to the brand under which the independent network of GTIL member firms provide services to their clients, as the context requires. GTIL and each of its member firms are not a worldwide partnership and are not liable for one another’s acts or omissions. In the United States, visit grantthornton.com for details.
© 2015 Grant Thornton LLP | All rights reserved | U.S. member firm of Grant Thornton International Ltd