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Corporate Tax Reform Could Raise Small Business Taxes By 8 Percent

Written by Ken Gaebler
Published: 4/13/2011

Corporate tax reform is gaining ground in Congress, however, two studies are warning against it.

Two new studies are claiming that the proposed corporate tax reform could have serious implications in small business finance news, as both conclude that it could have adverse effects on the small business community.

Corporate Tax Reform

The current push for reform is centered around eliminating business tax credits and deductions, which would ultimately require business owners who pay taxes as individuals - or "flow-through" corporations - to pay 8 percent more on average. By doing away with tax expenditures, Congress would be able to lower the corporate tax rate as a whole without increasing the deficit.

However, research from Ernst & Young says that if this approach were adopted businesses would see higher tax bills and very little relief from a lower corporate tax.

The Kogod Tax Center reported similar findings, and further suggested that Congress instead adopt a solution that applies the same reduced corporate tax rate for all businesses, regardless of their structure.

"If we eliminate business deductions for all businesses, including those that are not corporations, but only reduce corporate tax rates, we could hurt a lot of smaller businesses on Main Street in the process," said David Kautter, managing director of the center, in a statement.

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