Florida Congressman Introduces Bill To Preserve Tax Fairness For Small Businesses
As MSCI partners at the S-Corp Association reported last week, Rep. Vern Buchanan (R-FL) has introduced legislation that will ensure all U.S. businesses, regardless of how they are formed under federal tax law, pay the same top income tax rate.
The bill, called the Main Street Fairness Act, would cap the top pass-through business tax rate at the top corporate rate, which is currently 35 percent. (Under current law, pass-throughs face a top income tax rate of 39.6 percent.) Going forward, if Congress would reduce the corporate rate, pass-through businesses also would pay the new lower rate. MSCI is very encouraged by this legislation.
As a reminder, MSCI supports comprehensive, not corporate-only, tax reform. The vast majority of U.S. businesses (93.4 percent) are pass-through entities and file their federal income taxes through the individual, rather than corporate, tax code. Corporate-only tax reform would not only fail to lower tax burdens on these job creators, it actually might raise taxes on them. Rep. Buchanan’s bill would prevent that.
One note: the bill as currently written does not apply to all active pass through income, but the S-Corp Association has said it will fight to expand the bill to include that.