The Economy

Small-Business Owners Allege Tax Plan Bias

Most small-business owners oppose the current tax-cut bills, according to a recent poll, with many feeling they unfairly favor large corporations.
David KatzNovember 27, 2017

Fifty-one percent of small-business owners “oppose the tax plan that has been proposed in Congress,” while 31% support it, according to a poll released today.

Without specifying whether it was asking about the Senate or House Plans, or both, the newly formed Businesses for Responsible Tax Reform also reported that 52% of the 794 small-business owners polled feel the proposals favor large corporations over small businesses, while 37% disagree that the plans evince such bias.

Fifteen percent of the poll respondents, whose businesses had a maximum of 50 employees, said they weren’t sure about the bias of the tax bills. In terms of their political sympathies, 36% of the respondents identified themselves as Republicans, 29% as Democrats, and 35% as independent or other.

An alleged favoritism for large corporations over small businesses in the bills has already created political problems for enactment of a tax reform law. For example, Ron Johnson, a Republican senator from Wisconsin, recently told The Wall Street Journal that he wouldn’t vote for the Senate bill, saying that the legislation unfairly tilts toward corporations over “pass-through” entities, such as S corporations or limited liability corporations.

While both the Senate and House plans propose to cut corporate taxes from to 20% from 35%, pass-through rates would stay over 30% in the Senate bill, with the House bill tightly curbing how much pass-through profit could be taxed at a new rate of 25%, according to the WSJ.

Fifty-eight percent of the owners of pass-through businesses polled oppose making tax cuts for pass-through businesses temporary while making those for corporations permanent. Twenty percent support such a plan.

Unlike shareholders of public corporations, owners of pass-through businesses may be taxed as individuals. Further, current Congressional tax plans make individual tax cuts—including those affecting pass-through ownerstemporary.

The survey was conducted on November 17 and November 18 by Public Policy Polling, which is widely identified as a Democratic polling firm. Businesses for Responsible Tax Reform, a coalition of small-business owners opposed to the tax bills, was  formed on Nov. 14.

The coalition has reportedly said that it will launch a six-figure television advertising campaign attempting to persuade Republican Senators James Lankford (Oklahoma) and Bob Corker (Tennessee) not to support any plan that boosts the federal government’s budget deficit.

The survey also found that:

  • Almost 70% of the respondents are against allowing corporations to continue to deduct state and local taxes from their federal taxes but not allowing the owners of pass-through businesses to do the same.
  • More than 60% oppose increasing the national debt by $1.5 trillion to pay for tax reform over the next 10 years, while 28% support it.
  • Seventy-percent said their businesses are harmed when big companies can exploit tax loopholes to lower their tax rates.
  • Seventy-two percent felt that large corporations shouldn’t be able to declare foreign-sourced income to lower their taxes.