Small business groups aren’t embracing the tax-reform plan proposed Wednesday by House Ways and Means Committee Chairman Dave Camp (R-MI).
The proposal would lower tax rates for some small business owners who report business income on their personal taxes and pay at individual rates. According to a House Small Business Committee Fact Sheet, 95% of small businesses are structured as pass-through entities that file taxes as individuals.
But the National Federation of Independent Business and the Small Business & Entrepreneurship Council say Rep. Camp’s plan doesn’t offer much to small business owners.
“As an overall comment, I’d have to classify it as a disappointment,” says SBEC chief economist Ray Keating. “I think it falls short on some major goals.”
The plan would knock the seven tax brackets down to three: 10%, 25% and 35%. While Keating says this is a strong step toward simplification, 35% is still too high for his liking.
“Doing a major tax overhaul but leaving the top rate [at 35%] won’t accomplish very much,” says Keating.
Keating also says the plan gives preferential treatment to manufacturers.
“Manufacturers get to stay at the 25% tax rate, and not go up to the 35% tax rate. I would want to see a plan that gets rid of those types of preferences and treats everyone equally,” says Keating.
The NFIB said small business was left out of the mix.
“While we appreciate Chairman Camp pursuing tax reform that lowers some rates, we are very concerned that this plan does not address the core issues that are important to all small businesses: simplifying the code, leveling the playing field for all businesses, and addressing both corporate and individual tax rates,” said NFIB VP of Federal Public Policy Brad Close in a statement.
“We look forward to working with members of the Ways & Means Committee and Chairman Camp to achieve comprehensive tax reform that does not pick winners and losers based on size and type of business,” he added.