Accounting Today - April 2012

in which the individual tax rates are
similar to corporate rates.”
Reform
FROM PAGE 12

LEVELING THE
PLAYING FIELD
The lower tax rates proposed by the
administration plan and the Repub-
lican plan, while a step in the right
direction, won’t do much to tilt the
playing field for border-area busi-
nesses that can take advantage of
the much lower Canadian tax rate,
according to Dr. Nathan Oestreich,
professor of accounting at San Di-
ego State University. “So, Canada
cuts its corporate tax rate to 15 per-
cent, lower for small business,” he
said. “The U.S. proposes 28 percent,
one assumes to remain competitive.
Where will border-based business
activity reside? O Canada!” AT

LOOKING TO 2013

Despite the closeness of the two sides and the bipartisan acknowledgment that lower rates and overall reform are necessary, most observers don’t foresee a reform bill passing this year.

“I don’t expect there to be an actual legislative effort on tax reform in 2012, particularly given the pending presidential and congressional elections,” said Marc Gerson, former majority tax counsel to the House Committee on Ways and Means. “The recent payroll tax legislation suggests that it is extremely difficult to move even modest pieces of tax legislation through the system, so the thought of tackling major tax reform in the current political environment is practically a non-starter.”

“That being said, I do think this year will involve a lot of productive discussion on tax reform as the tax-writing committees continue their respective series of hearings on tax reform,” Gerson continued. “There are a number of substantive tax reform proposals, including Ways and Means Chairman Camp’s international tax reform discussion draft and Senator Mike Enzi’s tax reform bill. Comments on these by interested parties will certainly shape the tax reform effort in the future. And the administration’s business tax reform framework, although lacking legislative language and specific details, may also further the discussion.”

Political considerations aside, tax reform is complicated, lengthy, and even under the best of circumstances may take a number of years, Gerson indicated. “Before a true tax reform effort can get underway, Congress and the administration will have to agree on a number of threshold issues, such as the scope of reform and its desired budgetary impact, and such a meeting of the minds has not occurred yet,” he said. “Further, a simple comparison of the Camp discussion draft and the framework released by the administration demonstrates how far apart the parties are on issues such as the targeted top corporate tax rate and how the international

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