The New York Times reported yesterday on a Republican U.S. Senator’s concern that small businesses and other so-called pass-through entities are not being treated fairly under the Senate version of the GOP federal tax reform bill.
Sen. Ron Johnson, R-Wisconsin, said he could not vote for the current version of the bill because it gives an unfair tax advantage to larger corporations, at the expense of more than 90 percent of American businesses that are pass-through entities whose profits are distributed to their owners and taxed at the rates for individuals, the newspaper said.
The Senate bill would give pass-through owners a 17.4 percent deduction on their income taxes, while cutting the corporate tax rate to 20 percent from 35 percent. This means that the effective tax rate for a high profit pass-through would be 32 percent, which is significantly higher than the proposed 20 percent tax rate for larger corporations, according to the newspaper.
Senate Republican leaders hope to bring their version of the tax plan, which differs significantly from the $1.5 trillion tax cut approved by the House of Representatives, up for a vote after Thanksgiving.