Under the leadership of Chairman Dave Camp (R–MI), the House Ways and Means Committee released draft legislation for improving the tax treatment of small business.
This is an important step forward on the road toward comprehensive tax reform.
The special attention Ways and Means focuses on small businesses is truly warranted. One of the major issues plaguing the economy today is the unfair burden taxes place on small businesses.
The Ways and Means draft legislation would ease the burden of small businesses complying with our onerous tax code. It also paves the way for Ways and Means to address the larger inequities harming small business. First and foremost is that now, because of the fiscal cliff deal at the beginning of the year, small businesses pay a top rate of 39.6 percent on their income. Larger businesses pay 35 percent.
For small businesses to compete on equal footing with their bigger competition, Congress needs to equalize these rates. Preferably, it would equalize them at a rate that is at or below the average tax rate on businesses in the Organization for Economic Co-operation and Development.
Ways and Means could take another large step toward tax reform by addressing this issue in future proposals.