Tax report: New business deduction mainly benefits millionaires

Tax report: New business deduction mainly benefits millionaires
UPI

April 24 (UPI) — The Senate Finance Committee will hold a hearing on the new tax law Tuesday.

A report released Monday by Congress’ Joint Committee on Taxation found wealthy individuals will benefit the most from the new tax law’s deduction for pass-through businesses.

The tax overhaul, signed by President Donald Trump last year, created a new deduction of 20 percent for many owners of pass-through businesses, including S corporations and partnerships.

Pass-through businesses are not subject to corporate tax, but have their income “pass through” to their owners, taxed as individuals. About 95 percent of American businesses fall into this category.

According to the congressional estimate, 44 percent of the break’s benefit is going to the those making more than $1 million, which will cost the government an estimated $40.2 billion this year.

Republicans say the tax break for pass-throughs will level the playing field between corporations and small businesses. Democrats argue the deduction provides the biggest benefit for the wealthy and makes taxes more complicated for small-business owners.

Senate Minority Leader Charles Schumer, D-N.Y., said the report provides more evidence that the scales are tipped to favor the wealthy.

“The numbers don’t lie: more evidence the #GOPTaxScam was designed to tip the scales in favor of the wealthiest Americans at the expense of the middle class. From day one, Americans knew Republicans gave them a raw deal, one of the clearest reasons why the law remains so unpopular,” Schumer said.

Ryan Ellis, a senior tax adviser for the Family Business Coalition disagreed.

“Only the hopelessly anti-tax cut liberal media could spin the report this way. A majority of the small-business tax cut goes to households making less than $1 million per year. And this is somehow a tax cut for the rich?” Ellis tweeted.

The finance committee hearing is scheduled for Tuesday afternoon.

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