Blog: Question of the Week: Small Business Tax Cut Act
Statement
These questions are culled from phone calls, letters, faxes and e-mails sent to Rep. Gallegly's Camarillo, Solvang, and Washington offices. Rep. Gallegly adds another question and answer each week that Congress is in session. Please add your comments.
April 20, 2012
Question: How would H.R. 9, the Small Business Tax Cut Act, help create jobs?
Answer: 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 percent of the new jobs in this country.
As the U.S. Small Business Administration Office of Advocacy shows, small businesses represent 99.9 percent of the 27.5 million businesses in America and employ about half of all private sector employees.
Under current law, small businesses can face up to a 35 percent federal tax rate. Additionally, the individual tax rates that apply to small pass-through businesses, such as S corporations and partnerships, are scheduled to increase significantly in 2013 under the President's budget proposal.
I am a cosponsor of H.R. 9, which would allow small businesses with fewer than 500 employees to take a tax deduction equal to 20 percent of their active business income. The bill would allow the deduction for 20 percent of qualified domestic business income for the taxable year, or taxable income for the taxable year, whichever is less. The deduction would be limited to 50 percent of a qualified business' total W-2 wages.
The Joint Committee on Taxation estimates that H.R. 9 would reduce taxes on small businesses by $45.9 billion over 10 years. This savings will help free up funds to allow small businesses to retain and hire new employees.
I voted for H.R. 9 when it passed the House of Representatives on April 19 by a vote of 235-173. The bill now goes to the Senate.
For more information on my positions on economic issues, please see my Key Issue: Economy & Jobs page.
For previous Questions of the Week chronologically and by topic, please see my Questions of the Week page.
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