Majority of Small Business Owners Oppose Tax Reform Proposals

Majority of Small Business Owners Oppose Tax Reform Proposals

Press Release

Dt:  November 27, 2017
Fr:  South Carolina Small Business Chamber of Commerce (SCSBCC)
Re: Majority of Small Business Owners Oppose Tax Reform Proposals
Ct:  Frank Knapp, President & CEO, SCSBCC: Co-Chair, Businesses for Responsible Tax Reform, 803-252-5733 (o), 803-600-6874 (c), fknapp@scsbc.org

The Businesses for Responsible Tax Reform released a new scientific opinion poll today showing that the majority of small business owners oppose the tax plans under consideration in Congress, with 51% of respondents saying they oppose the tax plan while only 34% support it. The poll of 794 small business owners nationwide also found 52% agree the current proposals favor large corporations over small businesses (37% disagree), and 58% believe the wealthy and corporations will benefit most from the plan, while only 32% believe the middle class and small businesses will benefit most. A full 60% of respondents do not believe the current tax proposals put small businesses on a level playing field with big businesses (only 24% believe they do).
In order to pay for tax reform, the current proposals cap or eliminate deductions most small business owners take. The majority of small business owners oppose Congress doing away with or limiting these deductions: 53% oppose capping the mortgage interest deduction and eliminating the state and local tax and the home office deductions in favor of reducing their income tax bracket several percentage points. Indeed, 82% of respondents take the state and local tax deduction on their federal taxes, 62% take the federal mortgage interest deduction, and 45% take the home office deduction. Sixty-nine percent of small business owners oppose the provision preventing pass-through businesses from deducting state and local taxes from their federal taxes while allowing corporations to continue to do so.

Importantly, 37% of respondents reported a household income of less than $75,000 per year. More than half (54%) of respondents reported an annual household income of $100,000 or less.

Additionally, six in 10 respondents (61%) oppose increasing the national debt by $1.5 trillion to pay for tax reform, as the current proposals would do.

The majority of respondents also oppose making corporate tax cuts permanent and cuts for pass-through businesses temporary: 58% oppose eventually ending tax cuts for pass-throughs like S-corps, LLCs and proprietorships in 2026 while making corporate tax cuts permanent, and only 20% support it. This is understandable, given 84% of respondents identify as being pass-throughs, such as an S-Corp., LLC, sole proprietorship or partnership. Only 6% of respondents said their business was organized as a C-Corp.

Of note, 36% of respondents identify as Republican, 29% as Democrat and 35% as independent or other.

Key findings:

  • The majority of small business owners oppose the tax proposals under consideration in Congress. Based on what they’ve heard so far, 51% of respondents oppose the tax plan that has been proposed in Congress, while 34% support it.
  • Small business owners say the current proposals favor large corporations over small businesses. 52% of small businesses agree the proposals favor large corporations over small businesses, while 37% disagree that they favor large corporations over small firms.
  • Six in 10 small business owners say the tax proposals do not put small businesses on level playing field with big businesses. 60% of small businesses disagree the proposals put them on a level playing field with big businesses, while only 24% believe they will.
  • The majority of small businesses believe the current tax proposals will benefit large corporations and the wealthy. 58% of respondents say large corporations and the wealthy will benefit the most from the tax plans before Congress. Only 32% believe the middle class and small businesses like theirs will benefit.
  • Small businesses oppose raising the debt by $1.5 trillion to pay for tax reform. 61% of respondents oppose the plan that increases the national debt by $1.5 trillion to pay for tax reform over the next 10 years, while just 28% support it.
  • The majority of small businesses oppose making tax cuts for pass-through businesses temporary, while making those for corporations permanent. 58% of respondents oppose a tax bill that would eventually end tax cuts for pass-through businesses such as S-corps, LLCs and sole proprietorships while making corporate tax cuts permanent (20% support it).
  • Nearly 7 in 10 small business owners oppose allowing corporations to continue to deduct state and local taxes while pass-through businesses cannot. 69% of respondents oppose allowing corporations to continue to deduct state and local taxes from their federal taxes, but not allowing the owners of pass-through businesses, such as S-corps, LLCs, and sole proprietorships, to do the same.
  • Small businesses don’t want deductions eliminated in order to reduce their tax bracket several percentage points. 53% of small businesses oppose eliminating the home office and state and local tax deduction, and capping the mortgage interest deduction, in favor of reducing their tax bracket several percentage points. 38% support this.
  • Most small business owners take the deductions lawmakers have proposed eliminating or capping to pay for tax reform. 82% of respondents take the state and local tax deduction, 62% take the federal mortgage interest deduction, and 45% take the home office deduction.
  • The vast majority of respondents organize their businesses as pass-through entities, such as S-corps or LLCs. 84% of respondents organize their businesses as an LLC, S-Corp, partnership or sole proprietorship. Only 6% organize their businesses as C-corps. 8% said they organize their business as “something else.”

“Congressional efforts to quickly pass tax reform are clearly not in the best interest of small businesses,” said Frank Knapp Jr, co-chair of Businesses for Responsible Tax Reform. “It is time Washington step back from doing the bidding of large corporations and focus on the needs of small businesses, which create the vast majority of our country’s jobs.”

“Tax reform that simplifies the tax code and helps level the playing field for small businesses, while growing our economy by putting more money in the hands of the Main Street consumer should be the goal,” said Knapp, who is also president and CEO of the South Carolina Small Business Chamber of Commerce. “It’s time Congress scrap the current proposals and start over by writing tax reform in a bipartisan manner that allows input from all parties and restores regular order for developing legislation.”

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