Hatch blasts administration for floating tax change

In a statement released Friday, Hatch blasted President Obama’s budget for raising taxes on small businesses and said that the idea recently floated by Geithner would subject many smaller entities to double-taxation. 

“This latest idea being pushed by Secretary Geithner will pose a serious threat to the economic health of American entrepreneurs,” Hatch said. “This is a terrible idea and I urge the White House to reverse course and stop tax increases that will threaten the economic recovery our nation deserves.” 

According to the National Federation of Independent Business, about 75 percent of small businesses are organized as so-called pass-through entities, which makes them subject to the individual tax code. Both the top individual and corporate tax rates currently stand at 35 percent.

With that in mind, a fair number of lawmakers, including Hatch, have said that any tax reform push should include both the corporate and individual tax codes. But the administration has appeared to show more interest in revamping the corporate tax code and, during congressional testimony last week, Geithner said that could be done first. 

“But to do corporate, you probably have to look at the broader class of business income that’s out there,” Geithner told the Senate Finance Committee.  “And I think, fundamentally, Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses to choose whether they’re treated as corporations for tax purposes or not. It’s not a fundamentally sustainable balance now.”

According to Bloomberg, the Treasury secretary also signaled this week that the administration’s push for tax reform that does not add to the deficit would not just apply to businesses that use the corporate tax code. 

“When we say revenue-neutral, we try to mean it sort of generally across business income, not just corporate,” Geithner said.

Elsewhere on Capitol Hill, a House Ways and Means subcommittee that deals with taxes is set to have a hearing next week that will discuss pass-through entities and tax reform. The subcommittee’s chairman, Rep. Pat Tiberi (R-Ohio), is another lawmaker that has called for more comprehensive tax reform.