U.S. Reps. Randy Hultgren (R-IL) and Jason Smith (R-MO) reintroduced the Bring Small Businesses Back Tax Reform Act, which sets new tax rates for businesses.
Specifically, the Bring Small Businesses Back Tax Reform Act would establish a new 12 percent tax rate on a pass-through business’s first $150,000 in income and a 25 percent tax rate on income above $150,000.
Because these businesses “pass through” income and losses to owners, many are subject to combined state and federal income tax rates over 50 percent.
The bill also allows immediate expensing of all investment in equipment by pass-through businesses, and sets simplified cash accounting for tax purposes for all businesses with gross receipts under $25 million.
“Growing up in a small business made me familiar with the struggles they face every day,” Hultgren said. When I travel throughout my district, small and mid-market business owners tell me that among many obstacles they face to expanding their operations and hiring more workers, high taxes remain central.”
A national poll conducted by Job Creators Network said only about 20 percent of small business owners plan to hire more employees over the next year.
Small business owners cite their tax burden as a main obstacle to growing their business. Pass-through businesses, organized as S Corporations, sole proprietorships, partnerships, and LLCs, comprise more than 60 percent of American companies and more than 50 percent of private sector jobs.
“Small businesses are the engine of America and employ more than 2.4 million workers in Illinois alone,” Hultgren said. “Yet governments tax their capital like it is personal income, and it isn’t working. As small businesses goes, so goes the American economy. As Congress considers comprehensive tax reform, it is time we give our small businesses the freedom, means and flexibility to expand and create jobs. My bill will give these employers room to grow by giving them back time and resources.”