From the reaction of members of the National Federation of Independent Business (NFIB), not just the nearly 25,000 in Ohio but all across the country, it is evident small business owners support the Tax Cuts and Jobs Act. The bill is slated to receive a vote in the Senate before the year-end. As the leading small business organization in Ohio, NFIB is urging senators Portman and Brown, to support it as well.
The United States has one of the highest federal tax rates for corporations in the developed world coming in at 35%. In comparison, Mexico’s corporate tax rate is 30%, the United Kingdom’s is 19%, and Canada’s is only 15%.
And while that may seem high, most small businesses in the United States are unincorporated, with three-quarters organized as pass-through entities, meaning they pay taxes at the individual rate, which can be even higher. The highest federal tax rate for individuals is above 40%, then when you add in state taxes, a lot of small businesses end up sending close to half of their income to the government. High taxes are taking a toll on small businesses.
The U.S. Senate is providing relief by creating a 17.4% deduction on pass-through income up to $500,000. This deduction results in a significant reduction in taxes for small businesses regardless of their tax bracket. Another important fact is it is available to all small businesses, including service providers such as plumbers and car mechanics.
Every four years we ask our members to evaluate 75 issues facing small businesses. In the ninth edition of the NFIB Research Foundations’ quadrennial Small Business Problems and Priorities, federal taxes on business income ranked in the top five as did tax code complexity. Not only are small business taxes high, they also dedicate too much time and money complying with the ever-changing rules and regulations.
There is encouragement among small business owners that the president and federal legislators see the need to cut taxes for small businesses. Small business accounts for 98 percent of all employers in Ohio and employs about half our state’s private sector workforce. Over the next several weeks, NFIB will be working to ensure tax reform becomes law. That way, small businesses can continue to lead the way in job creation and economic growth.
The above opinion is that of the writer and does not necessarily represent the views of The Lima News or AIM Media. Roger Geiger is the vice president and Ohio executive director of the National Federation of Independent Business.