US House Committee Discusses Small Business Tax Reform
Monday, July 17, 2017
Small business owners have given evidence before the Ways and Means Tax Policy
Subcommittee that lower tax rates, a simpler tax code, and certainty are critical
elements of any tax reform package.
The Tax Policy Subcommittee heard evidence from three small business owners
on how tax reform proposals would affect their businesses. A statement on the
Ways and Means Committee's website summarized their testimony saying that "tax
reform will help them expand their operations, hire more workers, and invest
in their local communities."
The witnesses said that a reduction in effective tax rates would allow them
to reinvest savings back into the business. They also highlighted problems they
had experienced with complexity in the tax system, referring to experiences
of unexpected tax liabilities and high legal and accountancy fees. In addition,
they said that permanent reform to the tax code was needed to provide certainty
to their businesses.
However, Chye-Ching Huang, from the Center on Budget and Policy Priorities,
a nonpartisan research and policy institute, argued that cutting the tax rate
for pass-through business would "overwhelmingly benefit the wealthy and
tax avoiders, not small businesses."
Referring to President Donald Trump's proposal to cut income tax to 15 percent
for pass-though business, she said that: "In reality, it would mostly help
wealthy filers – such as hedge fund managers, investment bankers, and
real estate investors – as well as high-earners who engage in tax avoidance
by converting their salaries to pass-through income."