"More than 100,000 small businesses in the state of Maryland who employ more than one million people* could benefit if the Senate and President Obama followed the lead of the House and approved the Small Business Tax Cut, H.R. 9," said Congressman Bartlett today. In the week of the federal income tax filing deadline for 2012, Congressman Roscoe Bartlett applauded a bipartisan majority of the House of Representatives approving The Small Business Tax Cut, H.R. 9 which would benefit over 22 million small business employers across the United States and reduce their taxes by almost $46 billion according to the Joint Committee on Taxation of the Congress. Congressman Bartlett voted for H.R. 9 which was approved by a vote of 235 to 173. [*Documentation from the Small Business Administration and the Census Bureau is below.]
Congressman Bartlett said, "America has been a prosperous country because of the ingenuity and risk-taking by small business entrepreneurs. Small businesses are the job creators, the engines of our economy. From 2005 to 2008, small business created a net total of 63,576 new jobs in Maryland according to the Small Business Administration (SBA). But during the recession from 2008 to 2009 a net total of 57,433 small business jobs were lost in Maryland. Unemployment remains stubbornly high in western Maryland because President Obama's policy changes and preferences for more and more regulations and higher taxes punish America's most successful entrepreneurs and are oppressing our small business owners. Is it any wonder why we're experiencing the weakest recovery in decades? Policies matter. If the Senate approved and President Obama signed H.R. 9, America's small businesses would be encouraged to invest in new innovations, create more jobs and strengthen our economy."
The best way to boost economic growth and get people back to work is through small business growth. Over the past 17 years, small businesses with fewer than 500 employees have generated 65% of the new jobs in this country.
Yet under the current tax code, small businesses are faced with enormous burdens that are sapping their capital. Irrespective of whether they pay taxes at the corporate or individual level, small businesses can face up to a 35% federal tax rate.
H.R. 9, the Small Business Tax Cut, will help small business owners retain more capital, invest in their businesses and create more jobs. Under the proposal, small businesses would be allowed to deduct 20% of their income from taxes irrespective of how they are organized, up to 50% of their W-2 wages (in some cases distributions made to partners may be treated as W-2 wages for these purposes). So, whether you are organized as a corporation or you are one of the 75% of small businesses that operate as a pass-through, you will benefit from this new deduction.
The non-partisan Joint Committee on Taxation has estimated that H.R. 9 will benefit over 22 million small business employers across the United States reducing their taxes by almost $46 billion. H.R. 9 is consistent with the [Paul Ryan] budget plan just adopted by the House and was part of the Pledge to America.
WHAT THE SMALL BUSINESS TAX CUT H.R. 9 WOULD MEAN TO MARYLANDERS
In Congressman Bartlett's floor speech on April 18, 2012, he discussed the contributions of small businesses in Maryland:
According to the Small Business Administration, as of 2009, in Maryland, there are 106,441 small businesses with between 1 and 500 employees employing 1,105,200 individuals.
The top three industries by employment:
· Over 157,000 employees in health care and social assistance
· Over 135,000 employees in professional, scientific, and technical services
· Over 133,000 employees in construction
According to the Census Bureau, of the small businesses in Maryland with between 1 and 500 employees:
· 15,717 are women-owned and they employ 147,751 individuals
· In addition to these small businesses, in 2009 Maryland was home to 365,492 sole proprietorships.
Many of these self-employed small businesses will also benefit from the 20% Small Business Tax Cut.
How it Works: For simplicity, consider the example of a small business that under current law would pay a 35% federal tax on $100 of income, resulting in a $35 tax bill. Under the House Republican proposal, the small business would be able to deduct 20% of its income from tax (20% of $100 = $20), subject to the 50% W-2 wage limitation. The small business would then pay the same 35% tax on the remaining $80, resulting in a $28 tax bill. Under the House Republican proposal, the small business immediately saves $7 in federal taxes.