Five Key Things That U'S' Tax Policy Analysts Should Know about Business Perspectives on Tax Issues

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Five Key Things That U.S. Tax Policy Analysts
Should Know about Business Perspectives on Tax
Issues and Its Policy Implications

• Annabelle Canning, Esq.
• Verizon Wireless
• Washington, D.C.
• 29 September 2006

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OVERVIEW

• Businesses care about taxes that increase the
  cost of investment in business equipment and
  infrastructure making U.S. businesses less
  competitive in the global marketplace
• Businesses care about transaction taxes and
  (user) fees imposed on goods and services that
  affect demand for such goods and services and
  impact revenue growth
• Businesses care about simplification and
  efficiency in tax administration and are
  concerned with possible tax exposure under laws
  that are antiquated and difficult to administer
• Governments like to make businesses tax
  collectors businesses should not be caught in
  the middle and liable financially for
  administration of ambiguous tax statutes
• Businesses care about tax policy because of
  uncertainties associated with many tax laws and
  requirements in Sarbanes-Oxley to disclose
  uncertain tax positions

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Impact of High Taxes on Business and
Infrastructure Investment

• Excessive taxation of equipment investments
  increase business costs for companies competing
  for capital in a global economy
• Tax Incentives for infrastructure investment by
  Info/tech businesses should not differ from
  incentives for manufacturing businesses
• Lower taxes on business investments result in an
  increased ability to grow businesses and invest
  in additional equipment and infrastructure

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Impact of Inconsistent Imposition of Transaction
Taxes

• Equity issues Transaction taxes imposed at
  lower rate on broader base have less impact on
  consumer demand and less impact on revenue growth
• Fairness issues differences in taxation should
  not influence consumer choice of goods/services
  and should not create winners and losers
• Need for transparency in imposition of certain
  state and local transaction taxes and user fees
  government should not try to hide taxes

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Impact of Antiquated Statutes and Decentralized
Tax Systems

• Multiple levels of taxation with inconsistent
  definitions, inconsistent sourcing rules,
  hundreds of different tax bases and thousands of
  different tax jurisdictions are grossly
  inefficient.
• Many taxing jurisdictions oppose centralization
  and simplification of tax statutes due to
  concerns regarding loss of control
• Huge administrative costs associated with current
  system and lack of certainty in scope of taxes
  waste of scarce resources for both industry and
  government

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Businesses Are Frustrated by Lack of Certainty
and Potential Tax Exposure

• Tax administrators tend to broadly interpret old
  statutes applicable to manufacturing economy
  federal and state legislatures should update
  existing statutes for new information economy.
• Businesses should not be required to collect
  taxes without clear legislative intent to impose
  such taxes.
• Government and businesses must work together to
  reform tax systems to ensure the continued
  ability of U.S. businesses to compete in a global
  economy.
• Equity, fairness, transparency and certainty
  should form basis for legislative reform of tax
  systems.

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Tax Policy Is Important to Business Because of
Need for Certainty and Requirements of
Sarbanes-Oxley

• Businesses need greater certainty regarding the
  applicability of tax statutes to avoid litigation
  and financial exposure under Sarbanes-Oxley.
• Businesses are required to disclose uncertain tax
  position to facilitate greater transparency.
• Increased clarity and transparency by government
  in the application of tax laws through tax reform
  and through clearer administration of tax laws
  would benefit business, government and the public.