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Rep. Nydia M. Velázquez (D-NY), the Ranking Member of the House Small Business Committee, released the following statement after the House passed H.R. 1, the Republican Tax Scam bill:

“As I’ve said before, this bill takes a wrecking ball to our middle class. Small business owners have always been the core of this nation’s middle class and they will also suffer from this ill-conceived bill.  Rather than rewarding entrepreneurs with a simpler, fairer tax code, the Republicans would shovel greater tax breaks to the extremely wealthy and large corporations. 

            “Republicans’ much-touted change to pass-through rules will help very few small business owners, while significantly benefiting large corporations.  The top 1 percent of households get more than a fifth of their income from pass-throughs, compared to less than 6 percent for households in the middle 60 percent of the income distribution.  

“Many startups would see next to no benefit from this change. Under the Republican plan, pass-through owners deduct a set percentage of their business income but active small startup owners will see less benefit than investors not doing anything to operate the business.

“At the same time, the bill takes an already complex tax code and makes it worse.  Small companies don’t have the accounting and legal resources that large corporations do to exploit loopholes and will be especially harmed by greater complexity.  Meanwhile it penalizes some small business owners based on their sectors, picking winners and losers based on their chosen field.

            “On top of all this, deductions that small business owners rely on -- and their customers use – would be eliminated or reduced.  If you’re a small business who takes out potential clients to events to pitch them, you lose that deduction. If you’re a small business proprietar of a theater or golf course who relies on these sort of business outings for customers, you’ll take a hit.  If you’re a homeowner who uses the mortgage interest deduction, there’s a good chance you’ll suffer from the cap on that deduction. And, for small firms that are in home construction, roofing, electrical work and realty, you’ll see slower growth and less revenue thanks to this cap. 

            “All in all, just as it harms the middle class and working families, this bill is a tax scam for small businesses.  Every Republican who voted for it chose big corporate CEOs over the small, Main Street firms in their communities. They should be reminded of this vote when they are back in their districts next week.”