An influential group of small businesses applauded a proposal by President Donald Trump and Republicans to slash taxes.
The National Federation of Independent Business on Wednesday called the GOP’s framework for tax reform a “good start” and urged lawmakers to take swift action.
“We are grateful to the President and congressional leaders for remaining steadfast on tax reform. We are pleased to see that the initial plan calls for reducing taxes on pass-through companies, which represent the overwhelming majority of American small businesses,” the group said in a statement.
So-called pass-through companies make up 95% of all American businesses. Pass-through companies, including S-corporations and LLCs, pass their profits directly to owners, so earnings are taxed at individual rates on the owners’ income tax returns. As a result, many small businesses effectively pay a higher tax rate than large corporations. The top individual tax rate is currently 39.6%, compared to the top corporate rate of 35%. The GOP’s initial plan calls for a new rate for pass-through companies of 25%.
The NFIB, which represents 325,000 small businesses in the U.S., said it will “remain engaged” as the Trump administration and congressional leaders continue to work on tax cuts.
“Small businesses need meaningful reform that lowers their tax bill, allows them to invest in their business, create jobs, and grow the economy,” the NFIB said.