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GOP Tax Scam Benefits Wall Street Over Main Street

Members of the U.S. House Small Business Committee heard this week that a Republican tax law signed by the President in December has done little to alleviate entrepreneurs’ concerns about tax code complexity. During a Wednesday hearing, Small Business Democrats argued that the Republican bill will provide Wall Street corporations and extraordinarily wealthy individuals with enormous tax reductions but do little to help Main Street businesses and fledgling startups grow or hire.

“It has become increasingly clear that the lion’s share of benefits from the Republican tax scam will flow disproportionately to the largest corporations and the very wealthy,” said Rep. Nydia M. Velázquez (D-NY), the top Democrat on the Committee.  “At the same time, small businesses, who could have benefited from well crafted, targeted tax reform are left behind.  Some small firms are seeing – at best – marginal benefits. Many others have yet to see any meaningful advantage at all.”

During the hearing, Members heard how the tax law is, in many cases, adding unnecessary complexity to small businesses’ tax filings.  In particular many Internal Revenue Service (IRS) regulations have yet to be issued, depriving small businesses of the clarity they need to plan ahead.

“There is… so much uncertainty in the law that it’s actually still quite hard to find an accountant who can give you a simple yes or no answer about whether you should restructure your small business to even see a potential nominal benefit from the law,” Davis Senseman, Founder, of Davis Law Office said in testimony before the Committee.  “We sit here today, July 25, and have yet to see the regulations the IRS promised would be out by July at the latest to provide any reassurance around the new Act.”

Members of Congress echoed this sentiment, noting that tax code uncertainty imposes significant burdens on small companies.

“Unfortunately, the Trump tax law did little to alleviate the twin problems of uncertainty and complexity. 

Republicans promised that taxpayers would be able to file on a piece of paper the size of a postcard,” said Velázquez.  “Leaked IRS documents suggest there will be additional paperwork and worksheets small businesses will need to navigate.”  

Ranking Member Velázquez compares the “postcard” sized form (L) Republicans promised taxpayers could use to file taxes with recently leaked IRS draft forms (R) that many entrepreneurs will likely need to fill out.

It was noted by both witnesses and Members of Congress that more could have been done to bring transparency to the process and give small businesses a voice to ensure their goals of simplicity and certainty were addressed.  

Moreover, the Republican tax scam provides the largest gains to the biggest companies and wealthiest individuals.  Mom-and-pop entrepreneurs and modest-income, sole proprietors will likely see little benefit from the recent tax changes, witnesses testified.

“The median income for a self-employed individual with an incorporated business in the United States was $49,204 in 2014, the last year for which the SBA has data,” Senseman continued. “These businesses are the bodegas, auto mechanics, family restaurants, and small farmers who would have to pay more to a tax attorney… or an accountant to figure out the new law than they would reap in tax cuts, or who are seeing increases in health insurance premiums that outweigh any nominal tax cut they might receive.”

Velázquez argued that because the tax scam tilts so heavily in favor of big companies and the wealthy, small firms will also see little additional consumer demand.  

“Unlike the very wealthy, when working and middle-class families get a tax cut, they are more likely to spend it quickly at local, Main Street businesses, spurring customer demand for small businesses’ goods and services. Yet, rather than putting money in the pocket of a working family who are likely to spend it immediately at a local diner or a hardware store, the Republican tax scam just provides another big giveaway to billionaires and millionaires who will park the money in hedge funds and other Wall Street investment vehicles. That’s not just patently unfair, it’s also abysmal economic policy. And, to top it off, the tax scam does all this, while adding trillions to our deficit, potentially imperiling programs like Medicare, Social Security and Medicaid.” the Congresswoman concluded.

The Republican tax scam was signed into law by President Trump in December. It passed the U.S. House of Representatives on a wholly partisan basis without any Democratic votes.  

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