House Republicans are working on tax reform that will benefit all Americans. We recently passed our 2018 budget resolution, paving the way for pro-growth, pro-worker tax relief.
America’s small businesses are the engine of the U.S. economy. The Republican tax plan cuts small business taxes to a maximum federal rate of 25 percent. The overwhelming majority of small businesses (95 percent) are currently considered “pass-through” entities, leaving their owners to pay the top individual marginal tax rate of nearly 40 percent. Combined with state and local taxes, small business owners often pay up to 50 percent of their income to the government. The current tax system also needlessly diverts their earnings to tax filing and compliance costs, instead of business reinvestment.
A federal tax rate of 25 percent would free up valuable dollars for hiring, increased wages, and expansion opportunities. When small business owners can keep more of their hard-earned money, they are more capable and more willing to reinvest back into their businesses, which benefits their employees and their communities. A recent Job Creators Network poll found that most small business owners would use a tax cut to hire more workers, raise wages, open an additional location, or buy new equipment. In other words, job creators will put their tax savings right back into their businesses and our economy.
This would provide employees who depend on small businesses to support their families, with greater financial security. In my home state of Michigan, 40 percent of residents cannot afford basic necessities. They will reap the benefits if job creators are incentivized to provide more career opportunities and bring workers up the socioeconomic ladder.
In Michigan alone, the House Republican tax plan is projected to increase median household income by $4,716 and create over 50,000 new full-time jobs. This is significant change for wage earners and our local economy.
Given the number of small businesses, tax cuts would have a transformative impact on the economy. In Michigan, there are more than 866,000 small businesses, which employ nearly two million workers—50 percent of the state workforce. Small businesses also account for roughly 90 percent of Michigan’s exports. Nationally, America is home to nearly 30 million small businesses, employing roughly 60 million workers—half of the U.S. workforce. In fact, small businesses make up 99.9 percent of all U.S. companies, generating over $470 billion in exports every year.
The last time tax reform was enacted, Lee Iacocca was CEO of Chrysler and Steve Yzerman was captain of the Detroit Red Wings. Over three decades later, Congress has a once-in-a-generation opportunity to enact tax cuts aimed at creating jobs, growing paychecks, and putting American workers first.
Fairness for all is prosperity for all: bigger paychecks, growing businesses, and a stronger economy.
Rep. Paul Mitchell represents Michigan’s 10th Congressional District.
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