As President Donald Trump and the GOP rush to push tax reform, small-business owners and advocates are speaking out on what taxing issues are crippling them and the reforms they would like to see. With the sector creating two-thirds of U.S. jobs, freeing up money to help them invest more in their business is critical, say many experts.
“Smaller businesses really are, in a lot of ways, the drivers of the economy,” says CPA Robert Bernstein, a partner in Grassi & Co., a New York City area accounting firm.
Taxes consistently emerge as the No. 1 issue for small business in the CNBC/SurveyMonkey Small Business Survey. In the recently released third-quarter edition, taxes once again topped the list of “critical issues,” ahead of health care and regulation. The survey, which had more than 2,200 respondents, was released in late September.
That same month, Trump proposed a variety of tax-reform measures, both for individuals and business. The reforms to individual tax rates would affect small-business owners, who are often taxed on their income at individual tax rates. The Senate last week approved a Republican-backed fiscal 2018 budget that will enable Republicans to pass tax legislation through the Senate with 50 votes or more.
“The vast majority of small-business owners pay taxes through their individual return,” says Dave Yeske, CFP, managing director of Yeske Buie, who works out of the firm’s San Francisco office. He is also the director of Golden Gate University’s financial planning program.
When it comes to individual taxes, the president has proposed reducing the number of tax brackets from seven to three, with tax rates of 12 percent, 25 percent and 35 percent. Current rates range from 10 percent to 39.6 percent.
More from the CNBC/SurveyMonkey Small Business Survey:
Confidence in Trump drops on Main St. even among conservatives
How Main Street can survive in the Amazon Age
Tax reform blind spot
On the business side, the corporate tax rate would be reduced from 35 percent to 20 percent, a move many say will make American companies more competitive with those around the world.
Trump is also proposing a 25 percent tax on sole proprietorships and partnerships — known as pass-through businesses — which would be lower than the individual tax rates many currently pay.