House Bill Eases Small Biz Tax BurdenMay 18, 2016
On April 27, Rep. Vern Buchanan (R-Fl.) introduced the NSBA supported, Main Street Fairness Act (H.R. 5076), to ensure that small businesses do not pay a higher tax rate than large corporations.
The Main Street Fairness Act will establish that businesses that file their taxes as pass-through income—sole proprietorships, partnerships, LLCs and S corporations—will never pay a higher tax rate than their larger counterparts. Specifically, the measure restores rate parity by capping taxes on pass-through businesses at the top C corporation rate. Under current law, corporations pay a maximum tax rate of 35 percent, while small-business owners pay up to 39.6 percent under the individual income tax code on top of additional taxes on earnings and investments. This rate disparity puts pass-throughs—83 percent of small businesses—at a competitive disadvantage and hinders growth. The Main Street Fairness Act as introduced will close this differential, so that all businesses regardless of entity are subject to the same rates.
NSBA strongly believes that allowing the smallest businesses to pay a much higher tax on their business income than a multinational, multi-billion dollar corporation undercuts any semblance to fairness, and is the reason why NSBA supports H.R. 5076.To promote economic growth, job creation, capital formation, and international competitiveness, fundamental tax reform is required. However, unless and until Congress agrees upon a replacement, NSBA believes that we must fix tax problems with the current tax code by developing simplification measures that are fair and fiscally responsible.
Please click here to read the NSBA letter of support for H.R. 5076.