The House of Representatives' recent proposal is good news for small business.
House Republicans hope to come to small business’ rescue.
Representatives last week unveiled a 35-page blueprint for a simplified tax code, which would slash the corporate tax rate, reduce the top individual income tax rate, and consolidate the tax code from seven tax brackets to three, among other provisions.
Business groups are applauding the outline, saying it’s an important step toward unburdening small businesses from complicated taxes.
Join NFIB’s fight for lower taxes.
“It will be a huge advantage for small business owners to have a tax return as simple as a postcard,” NFIB President and CEO Juanita Duggan told The Business Journals. “When Congress tackles tax reform, NFIB will fight for the lowest possible small business rates.”
The plan would reduce the corporate income tax from 35 percent to 20 percent, The Wall Street Journal reported. Additionally, the new plan would replace the seven current tax brackets with three, with a top marginal tax rate of 33 percent, down from 39.6 percent at its current level.
“Reducing the number of individual tax brackets from seven to three makes it easier for individuals to think conceptually about their marginal tax rates and make tax-planning decisions,” according to The Wall Street Journal.
The plan would also eliminate the estate tax and the alternative minimum tax, which have been a thorn in the side of business owners for years. Due to the substantial reduction in tax rates for businesses and individuals, the plan would close tax breaks such as the write-offs for state and local taxes, deductions for charitable giving, and the deduction for interest expenses for businesses, Politico reported.
The plan faces staunch opposition from Democrats in the House, and it isn’t likely tax code reform will be seriously considered until 2017—after a comprehensive plan is released and a new president takes office, according to several reports.
