WASHINGTON- House Financial Services Chairman Jeb Hensarling (R-Texas) on Thursday said the tax reform bill Republican lawmakers crafted in conjunction with the Trump Administration will help many of the small businesses in his Dallas County district.
But that’s not what others say, including Republican Sen. Ron Johnson (R-Wis.) and Democratic Rep. Dwight Evans (D-Pa.), who claim it favors big corporations and will kill jobs in small businesses.
Hensarling is upbeat: “We’ve got massive cuts. We got immediate expensing. We’re getting rid of the death tax,” Hensarling said in an interview that took place just hours before the bill passed the lower chamber.
“This is going to be a huge shot in the arm,” he added. “The best small business tax relief in a generation.”
When asked if the House version of the bill does more than its Senate counterpart to help small businesses, Hensarling said: “Well, of course, it came from the House.”
Evans, whose district includes much of Philadelphia, countered that the tax reform bill would hinder job growth.
“The Republican tax plan brings the ugly spectacle of job-killing tax cuts to the American people, while masquerading as tax reform simply proves again that the GOP is not prepared to govern, and not ready for prime-time,” Evans said at a press conference last week in which he was accompanied by city officials.
The Tax Cuts and Jobs Act proposes $5.5 trillion in tax cuts over the next decade and constitutes the most comprehensive tax reform package since the Graham-Rudman-Hollings Act of 1986.
The House bill would cut the maximum corporate tax rate from 35 percent to 20 percent and would reduce the number individual income tax brackets from seven to four. The estate tax would be eliminated and state and local property tax deductions would be capped at $10,000.
The Senate bill would phase in the lowering of the corporate rate to 20 percent over a two-year period and would reduce the number of individual income tax brackets to between five and seven. The bill would partially repeal the estate tax and eliminate state and local deductions.
The House bill reduces pass-through taxation on sole proprietorships and other small businesses from 35 percent to 25 percent. The Senate bill creates a new tax deduction but sunsets the pass-through cuts after five years while at the same time making the corporate cuts permanent.
If the tax deductions expire – many small business taxes would increase by about $45 billion per year in 2026, and 2027, according to the Joint Committee on Taxation.
Sen. Ron Johnson (R-Wis.) on Wednesday announced that he will not vote for the Senate bill in its current form because of the sunsets.
Johnson is the first Republican to make that declaration.
Two more GOP defections would kill the legislation considering the upper chamber’s 46 Democrats and two independent members are unlikely to support the measure.
The Senate Finance Committee is expected to complete its markup of the legislation by Friday and a floor vote could occur as early as the week after next.