Congressman offers tax bill to help small businesses

Rep. Vern Buchanan (R-Fla.) introduced legislation on Wednesday that would prevent small businesses from paying a higher tax rate than big corporations.

“Local mom and pop stores and medium-sized businesses should not be burdened with a higher tax rate than multinational corporations with billions of dollars in earnings,” Buchanan, a senior member of the House Ways and Means Committee, said in a news release.

Most businesses, including small ones, do not pay corporate income taxes. Instead, they are pass-through entities whose income is taxed at the indvidual level on their owners’ returns.

Under current law, the top individual tax rate of 39.6 percent is higher than the top corporate rate of 35 percent. When state taxes are factored in, some small businesses can end up paying a tax rate of more than 50 percent, according to the Tax Foundation.

Buchanan’s bill would dictate that pass-through businesses will never have to pay higher tax rates than corporations. The congressman said it is important for small businesses to get relief as Congress looks at tax-reform proposals.

“Even President Obama has called for reducing our corporate tax rate, but merely reducing the tax burden on corporations does nothing for more than 90% of American businesses,” he said.