Small-business lobby comes out against GOP tax plan

The National Federation of Independent Business criticized the GOP tax plan Thursday over a provision that lowers taxes for only certain kinds of businesses.
By Miriam Griffin | Nov 07, 2017
A prominent group of U.S. small businesses denounced the GOP tax-reform bill Thursday as overly favorable toward big corporations. The group, the National Federation of Independent Business, said in a statement that the legislation in its current form "leaves too many small businesses behind" but said that it would work with legislators to amend it.

 

"We are concerned that the pass-through provision does not help most small businesses," said Juanita Duggan, the group's president and CEO, in the statement. "Small business is the engine of the economy. We believe that tax reform should provide substantial relief to all small businesses, so they can reinvest their money, grow, and create jobs."

 

Duggan was referring to a provision that lowers the top tax rate for "pass-through" businesses from 39.6% to 25%. These are types of businesses that do not pay their own taxes but pass the tax obligations onto their human owners' tax returns. These businesses tend to be large.

The tax cut will only apply to certain categories of "business income," however. Tax rates for "labor income" will stay the same. And many types of businesses will not get any tax cut as their revenue streams don't fit the criteria. These include professional services firms, such as law firms and accounting services.

Brad Close, the business group's senior vice-president for public policy, said that his group wants the pass-through provision to expand to cover many more businesses. He said that the current formula amounts to "government picking winners and losers based on your industry."

Expanding the provision would cost the government more tax revenue, however. And that could put the business group in direct conflict with the legislative rules that mandate that the tax bill must not raise the deficit by more than $1.5 trillion over the next 10 years.

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