Thirty years ago, I was fortunate enough to fulfill my dream of coming to the United States and, after settling here in Utah, another dream took root – to start my own business.
I began by selling refried beans at the farmer’s market and through hard work and sacrifice have built a successful company. I’m proud to not only provide jobs, but also give back and invest in my community. But I’m well aware that in order for me – and other business owners - to continue to do just that, lawmakers in Washington must fix our federal tax code which has become a time-consuming, expensive and complex burden. Rather than encouraging people who also strive to build a successful business, it discourages that dream.
We’ve been stuck in place with our tax system since 1986 while the rest of the world has adapted to an ever-changing global market. The result is that the U.S. has one of the world’s highest corporate tax rates - 39 percent (combined state and federal). Our global competitors operate under a system that taxes them, on average, at 22.5 percent, a rate that has been on the steady decline since a 2003 high of 30 percent. This tax burden-imbalance skews the competitive playing field, and not to America’s advantage. It means that the hard-earned, once-proud label “Made in America” may still indicate higher quality, but it sure costs more to produce. And fundamental economics says it does not encourage more production.
It’s not just the high tax rates which burden businesses here regardless of size, but also the cost of complying with the tax code which has led to owners devoting much-needed resources to ensure they don’t violate its complex provisions. Simplification of the tax code would go far help relieve that burden and allow owners to dedicate those valuable resources to hiring more employees or expanding and investing.
Fortunately, there is now at least some hope for a consensus tax reform, with needed relief for individual Americans as well as the small and large businesses that employ them. Not only would this include lower rates for businesses of all sizes, but also provisions for unprecedented expensing of capital investments; small businesses like ours would be allowed to immediately deduct the full cost of our capital investments, rather than over the course of several years. More investment, greater expansion, and new jobs would follow here in Utah and across the nation.
Other bold, game-changing provisions include a plan to adopt the territorial tax system, which is currently used by most countries – and every one of the G7, except America. This reform would mean that Utah’s manufacturers and other businesses that export products overseas would no longer be taxed twice on their foreign earnings. A territorial system would place Utah’s companies on equal footing in foreign markets, and it would also repatriate trillions of dollars from overseas, and discourage corporate inversions.
All told, this comprehensive tax reform proposal is estimated to bring $7 billion in tax relief for Utah’s businesses, and would lead to the creation of more than 16,539 new jobs in Utah as well as an additional $5,764 in after-tax income for middle-income families as estimated by the Tax Foundation. More freedom for Utah families to spend and save their own money; more opportunities for Utah’s businesses to grow
Now is the time for the Trump Administration and both parties in Congress to come together and pass permanent, comprehensive tax reform in 2017. It will give others a fighting chance to turn their dreams of starting a business into a reality.
Jorge Fierro is the CEO of the Fierro Group, Inc., the Salt Lake City-based owner of Frida Bistro, Rico Brands and Rico Catering.