Business group urges supercommittee to remember small businesses

At a hearing last month, supercommittee members expressed an interest in seeing the tax code reformed, though many observers are skeptical that the 12-lawmaker panel has enough time to plan a full-scale overhaul. The supercommittee has until Nov. 23 to unveil its recommendations.

At the same time, small businesses and their backers have expressed concern for months that the Obama administration has placed more of an emphasis on revamping the corporate tax code.

{mosads}Many small businesses — often called “pass-through” entities — actually pay taxes through the individual tax code, and some analysts have said that those companies could end up paying more in taxes if only the corporate code was reformed.

Caldeira makes the same argument in his letter to Hensarling,  asserting that pass-throughs face the possibility of seeing credits and deductions they use eliminated in a corporate tax reform effort, without the benefit of lower rates. He added that businesses also could see the Bush-era tax rates for high-income brackets expire at the end of next year.

Prominent Republicans such as Rep. Dave Camp (R-Mich.), a supercommittee member and chairman of the House Ways and Means Committee, have long pushed for comprehensive tax reform for just those reasons. At the September supercommittee hearing, Democrats such as Sen. Patty Murray (D-Wash.), the panel’s other co-chairwoman, also declared that policymakers should look to overhaul the two codes together.

At that get-together, Hensarling noted that 50 percent of small-business income is taxed at the top two brackets and would see their tax bill increase if President Obama and Democrats can let the Bush-era rates for the wealthy expire. 

But Sen. Max Baucus (D-Mont.), a panel member and the Senate Finance chairman, retorted that only 3 percent of taxpayers with small-business income paid the top two tax rates.