In advance of a Sept. 13 U.S. House of Representatives subcommittee hearing titled, “Adding to Uncertainty: Small Business’ Perspectives on the Tax Cliff,” ABC called for immediate bipartisan action to avert the looming year-end tax increases.
In a letter to the subcommittee’s chairman and ranking member
, ABC addressed the scheduled $500 billion tax hike that would raise taxes across the board on income, investment, and inheritance if legislative agreement is not met by Dec. 31. While the House passed a bill that forestalls this massive hike, the Senate passed a bill that would allow double-digit tax increases on nearly a million small businesses.
With so-called pass-through entities, such as S corporations and LLCs, employing the majority of American workers, these increases will have a devastating effect on job creation and the U.S. economy as a whole.
A recent study by Ernst & Young also found these tax increases would cost more than 700,000 American jobs and reduce the economy by 1.3 percent while diminishing capital investment and lowering wages.
Moreover, the National Small Business Association predicts that one-third of all small business owners would be forced to sell outright or liquidate a significant portion of their company to pay the resurgent estate tax. In a capital-intensive industry such as construction, with a large proportion of closely-held and family-owned businesses, a reversion to pre-2001 estate tax levels would be nothing short of disastrous.
ABC stressed the importance of finding common ground and extending current policies as a bridge to comprehensive tax reform rather than exposing job creators and taxpayers to a perilous fiscal cliff.
Additionally, the respective House and Senate tax-writing committees will hold a joint hearing addressing taxation of capital gains and comprehensive tax reform on Sept. 20. The hearing will explore policy issues regarding the impact of capital gains across all income levels.