McCain backs tax overhaul
In speech to small business summit, McCain argues for "simpler, flatter and fairer" tax code.
WASHINGTON (Fortune Small Business) -- Republican presidential candidate John McCain threw some red meat to the small-business crowd on Tuesday, promising that if elected president he would drastically overhaul the tax system, end corporate welfare, introduce tax credits to make health insurance more affordable, and help the GOP "reclaim our good name as the party of spending restraint."
McCain's tax proposal was the most drastic of the pro-business policies he mapped out Tuesday in a speech at the National Federation of Small Business' annual summit in Washington, D.C. McCain hopes to introduce a new, opt-in tax system with two rates and a "generous" standard deduction. Individuals would have the choice of filing under either the old or new system.
"What we need is a simpler, flatter and fairer tax code," McCain said.
McCain also pledged to keep income and investment tax rates low, and to reduce the corporate tax rate. He would further cut business taxes by allowing first-year expensing of new technology equipment purchases
That message resonated with businesses owners in the audience. MST Inc. president Kirk Meurer called McCain's speech "outstanding," and described McCain's tax proposal as the highlight for him.
"The tax increases [Democratic candidate Barack] Obama wants would drastically impair our ability to grow our business," said Meurer, whose Brooklyn Heights, Ohio, company installs commercial furniture.
In contrast, Meurer argues, McCain's policies recognize that high taxes are a key issue for business owners.
On the estate tax, a sore spot for many entrepreneurs, McCain sympathized with his audience but stopped short of calling for repeal.
"After a lifetime building up a business and paying taxes on every dollar the business earns, that asset shouldn't be subjected to a confiscatory tax. You know that better than I do," McCain said. "The estate tax is one of the most unfair tax rates on the books, and the first step to reform is to keep it predictable and keep it low."
For entrepreneur Bruce O'Donoghue, McCain's refusal to call for elimination of the estate tax was the one disappointment in an otherwise inspiring speech
"What I noticed was what he didn't say, and what he didn't say was, 'I want to end the death tax forever," said O'Donoghue,
Control Specialists is O'Donoghue's principal asset. The idea of paying a steep tax to one day pass the business on to his daughters is painful to him, said O'Donoghue, the president and owner of Control Specialists, a traffic engineering equipment and services company based in Winter Park, Fla.
Realtor Netta Scott of the eRealty Shop in Franklin, Tenn., also wishes McCain would push to eliminate the estate tax, and she questions whether McCain's vision of drastic tax reform is achievable. But she strongly favored one aspect of McCain's platform: his push for portable health insurance.
McCain said he would press for tax credits to allow individuals to purchase health insurance that would move with them when they change jobs.
He would oppose efforts to move toward a state-run system: "Certainly, the federal government cannot run the healthcare system in America with any efficiency, in my view," he said.
Insurance broker Richard Willard, owner of Griswold, Willard & Strong in Wethersfield, Conn., is one of many entrepreneurs who cite healthcare as one of their top policy issues for this election. Willard is a fervent fan of health savings accounts (HSAs), tax-advantaged accounts that consumers can use to pay health expenses directly.
Willard said he is backing McCain in November in part because he likes the Arizona senator's approach to healthcare. He hopes McCain will address the health insurance crisis by expanding programs such as HSAs.
Healthcare is also a key issue for Meurer, who covers 75% of the cost of insurance premiums for MST's 25 employees. Since he started the business 10 years ago, those costs have increased 350%, Meurer said. With fuel costs also eating into his bottom line, the expenses are challenging to keep in check, he said.
McCain's speech came as the NFIB published results from a survey showing that small-business owners' confidence in the economy is at a low ebb. The NFIB's Index of Small Business Optimism, updated monthly, tallies factors including owners' sales forecasts and hiring plans. In May, the index fell to its lowest level since 1980, the NFIB said in a report released Tuesday.
NFIB CEO Todd Stottlemyer said increasing healthcare costs and commodity prices are major concerns for his members. From rising grain prices afflicting bakers to oil and diesel costs whacking transportation companies, small businesses everywhere are suffering as operating costs increase.
Getting the economy back on track will be priority number one, McCain told his audience of entrepreneurs.
"As president, my goal will be to get our economy running at full strength again," he said. "That starts by supporting small businesses across this nation."