House Republicans will pick up their tax reform effort when they return from the July 4th break with a Thursday hearing on small business taxes, Rep. Peter Roskam of Illinois said Thursday.
Roskam, the chairman of the House Ways and Means tax subcommitee that will host the hearing, said small business “personal experiences and practical advice are essential as the House, Senate and the White House work together to deliver comprehensive, permanent tax reform this year.”
One consideration that is likely to get a full airing is the House Republican proposal to create a new, special 25 percent top tax rate for businesses that are taxed through the individual side of the tax code. President Trump endorsed a similar special tax rate for sole proprietorships, partnerships and S-corporations.
Many tax experts have warned that creating a special rate for pass-through businesses, as they are known, would lose revenue for the federal government. It also could invite abuse in the form of high-salaried professionals gaming the system by reclassifying their labor income as business income, funneling it through a limited liability company to get a major tax cut.
Roskam has said that Republicans are seeking to legislate rules that would prevent that kind of abuse.
Next week’s hearing is one of two planned for July, according to Ways and Means Committee Chairman Kevin Brady. The other will focus on the taxation of families and individuals. House Republicans have said they want to make individual taxes simple enough to file on a postcard.
While the committee has been holding hearings on tax reform, the main action is taking place in closed-door meetings between congressional GOP leaders and the Trump administration. The parties say they want to arrive at a unified Republican plan that can pass the House and Senate before writing legislation.
