Updated: Nov. 9, 2017
Updated: Nov. 15, 2017
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In their initial public responses to the House Republican tax overhaul plan released last Thursday (Nov. 1, 2017), two major small business advocacy groups issued very different responses.
The National Federation of Independent Business (NFIB) clearly opposed a specific part of the proposal and immediately issued this statement from its President and CEO Juanita Duggan:
“The National Federation of Independent Business is unable to support the House tax reform plan in its current form. This bill leaves too many small businesses behind. We are concerned that the pass-through provision does not help most small businesses. We believe that tax reform should provide substantial relief to all small businesses, so they can reinvest their money, grow, and create jobs.”
The U.S. Chamber of Commerce supported the proposal as noted in this statement from its Senior Vice President and Chief Policy Officer, Neil Bradley issued this statement:
“This bold tax reform bill is exactly what our nation needs to get our economy growing faster. A lot of work remains to be done to get the exact policy mix right and move from a legislative draft to an enacted law. We share (House Ways and Means Committee) Chairman Brady’s commitment to permanent reform because temporary tax relief simply will not produce the pro-growth environment we all desire. The business community stands ready to be an active partner with lawmakers over the coming weeks—and every step of the way—as we push to complete a re-write of our outdated tax system.”
Why were the associations’ initial responses so different?
The short answer:
- The NFIB membership is limited to small businesses.
- The U.S. Chamber has lots of big businesses as members.
- Most big businesses will benefit significantly from having taxes on corporate profits cut from their current rate (up to 39 percent) to the proposal’s 20 percent rate.
- Most small businesses will not be eligible for the reduced corporate tax rates.
- The NFIB is not opposing the cuts in corporate taxes. It is opposing the way those cuts are limited to large corporations.
Why won’t small businesses be eligible for the reduced corporate tax rates?
Most large companies are organized as C-Corporations, the type of business most likely to benefit from the reduction of corporate tax rates. However, most small businesses are organized in ways that pass the company’s tax liabilities to the individual(s) who own the company. Owners of these businesses are required to pay taxes at their personal tax rates. Therefore, they won’t benefit from the reduction in corporate tax rates.
While the plan includes many provisions small-business owners support, the NFIB believes the initial proposal walls off the primary incentives from as many as 95 percent of small businesses—most all of the ones in the service sector.
What to watch for in the coming weeks
- The NFIB has a history of standing firm in its opposition to legislation its membership determine are inequitable to small businesses.
- Negotiations over such a broad and complex piece of legislation will take place behind closed doors during the next few weeks.
- We will update you as the tax bill makes its way through the legislative process.
See related articles on these websites
Journal of Accountancy | Details of Tax Reform Legislation Revealed
Photo by Martin Falbisoner via Wikipedia, CC BY-SA 3.0
Updated (November 9, 2017)
After the release of the Senate tax plan on November 9, 2017, NFIB issued the following statement on behalf of Juanita Duggan, its president and CEO.:
“We are very encouraged by the plan introduced by Chairman Hatch today. It includes real tax relief, allowing small business owners to keep more of their money to invest in growth and create new jobs. Small business represents half the economy and half of all jobs. The Senate should move quickly so that tax reform can be sent to the President’s desk for his signature.”
Updated (November 15, 2017)
After the House passed a version of the Tax Cuts and Jobs Act on November 15, 2017, NFIB issued the following statement on behalf of Juanita Duggan, its president and CEO.:
“Today, the House took a big step toward tax cuts that will help America’s small businesses grow and create jobs. Small businesses account for more than half the jobs and half the economy. We look forward to working with the House and the Senate to get good small business tax cut legislation on the President’s desk soon.”