The proposal would change the way some company owners -- sole proprietors, partners and owners of what are called S corporations -- are taxed. They report business income on their individual 1040 forms and under current law, can be taxed at a rate up to 39.6 percent. Many small business advocates have long objected to the fact that some of these owners pay a higher tax rate than corporations whose rates currently top out at 35 percent.
Under the GOP proposal, the tax rate on the businesses known as pass-throughs would be 25 percent. The corporate rate would be 20 percent.
Small business advocates were split over the plan. The National Federation of Independent Business welcomed it, but others objected.
"The current proposal leaves a disparity by offering pass-through entities a 25 percent tax on business income while dropping the corporate rate to 20 percent," said Todd McCracken, CEO of the National Small Business Association. "We hope to work with tax writers to find ways to close that gap."
The pass-through provision has already encountered criticism among Democrats who say it would enable wealthy Americans to structure their finances in a way that would dramatically lower their tax bills. Sen. Ron Wyden, D-Ore., said it would allow hedge funds to "to convert ordinary income into low-rate pass-through income."
The NSBA was happy with some other proposals, including an end to the estate tax, which can force the heirs of company owners to sell a business or place it in debt in order to pay the government.
The Small Business Majority said the plan would not help most small companies.
"The current top rate is paid by less than 2 percent of pass-through business owners. Nearly 9 in 10 businesses that pass through their income already pay at the 25 percent rate or less," said the group's CEO, John Arensmeyer.
The plan would simplify business taxes, encourage business investment and increase owners' confidence, the Small Business & Entrepreneurship Council said.
"High confidence will drive investment, risk-taking, bigger economic growth and wage growth," said Karen Kerrigan, the group's CEO.
The overall tax proposal faces an uncertain path through Congress although it has the backing of GOP leaders and President Donald Trump. Another provision in the overall plan that is being criticized is a proposal to eliminate the deduction for state and local taxes.
OPTMISTIC ABOUT TRADE
Small and mid-sized U.S. businesses that export their goods and services generally anticipate healthy growth in their overseas sales in the next five years. That's the finding of a survey of 501 exporters released Monday by American Express.
Seventy-seven percent of the exporters who took part in the survey expect revenue from overseas sales to increase in the next five years, on average by nearly 30 percent. International trade is a significant part of their business -- on average 36 percent of annual revenue comes from other countries.
Global economics and politics are a concern to these companies, with nearly 80 percent saying changing economics is a significant challenge. Thirty percent said Britain's planned exit from the European Community will make them more cautious about international trade.
The survey, which questioned companies with total annual revenue between $250,000 to under $1 billion, was conducted in August.
PAID SICK LEAVE
Rhode Island has become the eighth state to require employers to give their staffers paid time off when they're sick. Gov. Gina Raimondo signed a bill Thursday giving staffers at businesses with at least 18 employees three days of paid sick leave in 2018, four in 2019 and five in 2020. Workers can also use the time to care for ill relatives.
A growing number of states and cities have enacted laws that give workers paid sick leave, which is not required under federal law. Rhode Island's neighbors, Connecticut and Massachusetts, also have sick leave laws, as do Vermont, California, Oregon, Arizona and Washington state.
--The Associated Press