A bipartisan pair of senators is offering legislation aimed at preventing small businesses from paying a higher tax rate than large corporations.
The Hill reports the legislation, offered this week by Sens. Bill Nelson, D-Florida, and Susan Collins, R-Maine, comes as Congress works to pass tax-reform legislation this year. A House version of the senators’ bill was previously introduced by Rep. Vern Buchanan, R-Florida, and is referenced in House Republicans’ tax-reform blueprint.
“Small businesses are the cornerstone of our local economies, and this bill is just one way we can help them succeed,” Nelson says in a news release.
Most small businesses are “pass-through” entities whose income is currently taxed through the individual tax code rather than the corporate tax code. The top individual tax rate is 39.6%, while the corporate tax rate is 35%.
Under the bill from Nelson and Collins, income from pass-through businesses would be treated like corporations’ income.
“I’m thrilled that two prominent senators this week introduced my Main Street Fairness Act in the Senate,” Buchanan says. “This shows the broad support for making sure that no small business pays a higher tax rate than large companies or corporations.”
