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ADA: Work with us to achieve comprehensive reform of tax code

July 14, 2017

By David Burger

Washington — In response to a June letter from Sen. Orrin Hatch, R-Utah, requesting input on tax reform, the ADA sent the Senate Finance Committee a letter on July 14 with a list of recommendations that outlined the Association's views on "tax-related matters that are of the highest importance to dentists and our patients."  

The same letter was also sent to leadership of the House Committee on Ways and Means in advance of the hearing that they held in July called How Tax Reform Will Help America's Small Businesses Grow and Create New Jobs.  These two committees have primary jurisdiction over tax reform in Congress.

Sen. Hatch, to whom the letter was addressed, is chair of the Senate Finance Committee, and the letter was signed by Drs. Gary L. Roberts, ADA president, and Kathleen T. O'Loughlin, ADA executive director.

"The ADA applauds your efforts to improve our current tax system to make it simpler, fairer and more growth-oriented," said Drs. Roberts and O'Loughlin in the correspondence. "The Association looks forward to working with you in the coming months to achieve comprehensive reform of our nation's tax code.

The two provided brief overviews of four tax policy matters important to ADA members in the letter:
  1. Cash accounting: "ADA supports the continued use of the cash method of accounting for small businesses, including pass-through entities and professional service corporations. The cash method of accounting is a simpler, fairer system for dentists who often must wait a significant amount of time before being reimbursed by insurance companies."

  2. Pass-through entities: "As Congress looks to reduce the tax rate on C corporations, ADA encourages you also to consider a rate reduction for S corporations or pass-through entities that are taxed at the individual rate." Class C corporations' profits are taxed separately from its owners under Subchapter C of the Internal Revenue Code, according to the Internal Revenue Service. In an S corporation, the profits are taxed based on personal returns.

  3. Higher education incentives: "Dentists just starting a practice today are saddled with an average of $261,149 of student loan debt. ADA encourages lawmakers to consider measures that would help relieve this significant debt load when considering options for streamlining the current patchwork of higher education tax incentives."

  4. Use of pretax dollars for health care: "ADA supports expansion and increasing flexibility of health saving accounts and flexible spending accounts, as well as preservation of the current tax exclusions for employer-provided medical and dental plans. Specifically, the Association supports returning the FSA limits to the pre-Affordable Care Act level of $5,000 and continuation of the index to inflation provision." The letter said FSA reimbursement is now limited to $2,500.
In June, Sen. Hatch called on tax stakeholders to provide ideas, proposals, and feedback on the American tax system, according to a news release from the Senate Finance Committee. "After years of committee hearings, public statements, working groups and conceptual exercises, Congress is poised to make significant steps toward comprehensive tax reform," Sen. Hatch said in a letter. "Members from both parties have acknowledged the shortcomings of our current tax system and the need for meaningful reforms to encourage economic growth and alleviate many of the burdens imposed on hardworking taxpayers. As we work to achieve those goals, it is essential that Congress has the best possible advice and insight from experts and stakeholders."

Follow all of the ADA advocacy efforts at ADA.org/advocacy.