Small Businesses Will Gain Little from House Tax Plan

For Immediate Release: 
Thursday, November 16, 2017

Statement from Small Business Majority Founder & CEO John Arensmeyer on why tax legislation passed today by the U.S. House of Representatives will grow the deficit without helping most small firms

 

We’re disappointed the U.S. House of Representatives today passed a tax bill that does little to help small businesses while ballooning the deficit by $1.4 trillion. This poor return on investment shows House lawmakers have no real interest in enacting tax reforms that will help most small businesses save money or create a level playing field for them to better compete with large corporations.

Indeed, the convoluted plan to cut the pass-through rate to 25 percent for some business profits will help very few small firms because nearly 9 in 10 businesses that pass through their income already pay at the 25 percent rate or less, and less than three percent will see any benefit under the proposed rate changes. While we’re glad the House made an attempt to help small businesses from the bottom up through the Brady amendment, it is a problem that this provision does not replace top-down tax breaks and that none of these tax cuts are paid for. By keeping the top-down tax breaks, most benefits will still go to wealthier pass-through entities.

Moreover, any tax cuts should be paid for by eliminating corporate loopholes that don’t benefit small businesses. Small Business Majority’s recent scientific opinion polling found seven in 10 small business owners believe their business is harmed when big corporations use loopholes to avoid taxes.

What’s more, the House repatriation provision fails to address the considerable tax advantage given to big businesses because it would not do away with the loophole that allows a select number of multi-national corporations to defer paying taxes on foreign profits. Small Business Majority’s polling found 75 percent of small business owners believe large corporations should not be able to choose to declare some or all of their income in a foreign country in order to lower their taxes. And finally, the proposed elimination of the estate tax would help virtually no small businesses. In fact, only about 50 total small firms and small farms paid the estate tax in 2016.

Even with some minor modifications, tax proposals like this House bill are absolutely not “small business tax cuts” as some are claiming. House lawmakers missed an opportunity to help small businesses, and unless the bill is radically overhauled, this supposedly transformative tax legislation will ultimately leave Main Street entrepreneurs even further behind their big business counterparts. If lawmakers want to create jobs–as they say they do–they should start by helping the millions of small businesses that actually do generate most of our nation’s jobs.

 

About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of a thriving and inclusive economy. We actively engage our network of more than 55,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.

Press State: 
National