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Republicans grapple over corporate tax reform without hurting small businesses

Republicans grapple over corporate tax reform without hurting small businesses
Small businesses have become the crux of the tax reform debate, with Republicans saying it makes no sense to do only a corporate overhaul because it will leave behind millions of mom-and-pop shops that file their taxes as individuals.

Under current law, small businesses that file as individuals end up at a disadvantage, House Speaker Paul D. Ryan, Wisconsin Republican, said Wednesday as he toured Accel Inc., a packaging company in New Albany, Ohio.

The U.S. corporate tax rate is 35 percent — much higher than the worldwide average of 23 percent — but small businesses such as Accel that file as “subchapter S corporations” can pay even higher individual rates.

“The top tax rate on subchapter S corporations in America — which is eight out of 10 businesses in America — their top tax rate’s 44.6 percent,” Mr. Ryan said. “You throw the Ohio income tax on top of that or the Wisconsin income tax, and we are taxing businesses, employers, jobs more than 50 percent in many cases.”

Republicans are trying to build momentum for their push for tax reform, knowing they will get little help from Democrats.

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