A recent House proposal to cut taxes for small businesses could boost manufacturing. The bill allows for businesses with fewer than 500 employees to take a 20% tax deduction.
The bill may dovetail with the President's push to strengthen American manufacturing through tax policy, says Dean Zerbe, National Managing Director at alliantgroup and former Tax Counsel to the Senate Finance Committee. By setting the maximum at 499 employees, the proposal could bolster manufacturing by going beyond more-limited definitions of a small business, he says. “What I see too often is that policy makers have a far-too-tight definition of small businesses,” says Zerbe. This plan's size limit would provide cash for the companies that are most likely to grow and hire, such as small manufacturers that have dozens, or even hundreds of employees, he says.
Indeed, Democrats and Republicans may be able to find common ground in their shared efforts to cut taxes on businesses, including manufacturers, Zerbe says: “The parties are at least within spitting distance of each other. You had the President talking earlier this year about a tax for businesses with the payroll employment tax, and now you have Republicans coming out with their proposal to help businesses. Clearly, both parties are interested in talking about business tax breaks.”
The proposed plan would stimulate growth by giving small companies the cash to expand their payroll. But it is still unclear if this proposal could pass the Senate and President's desk during a campaign year.
alliantgroup's team of legislative and policy insiders continue to speak out for tax reform that makes sense for American businesses, not just large corporations.