Small businesses have become the crux of the tax reform debate, with Republicans saying that it makes no sense to do only a corporate overhaul because it will leave behind millions of mom-and-pop shops that file their taxes as individuals, The Washington Times reported yesterday. Under current law, small businesses that file as individuals end up at a disadvantage, House Speaker Paul Ryan (R-Wis.) said. The U.S. corporate tax rate is 35 percent — much higher than the worldwide average of 23 percent — but small businesses that file as “subchapter S corporations” can pay even higher individual rates. “The top tax rate on subchapter S corporations in America — which is eight out of 10 businesses in America — their top tax rate’s 44.6 percent,” he said. “You throw the Ohio income tax on top of that or the Wisconsin income tax, and we are taxing businesses, employers, jobs more than 50 percent in many cases.” Republicans are trying to build momentum for their push for tax reform, knowing they will get little help from Democrats. Efforts to find common ground with President Obama on corporate taxes went nowhere, but with total control of the levers of Washington, Republicans are aiming even bigger now, saying both sides of the tax code can be overhauled to the benefit of everyone.
