(C) Wisconsin Watch
This story was originally published by Wisconsin Watch and is unaltered.
. . . . . . . . . .



Will taxes ‘automatically’ go up for 95% of business owners after the Trump tax cuts expire? [1]

['Erin Gretzinger', 'Wisconsin Watch', 'More Erin Gretzinger', 'Reporting Intern']

Date: 2023-05-05 19:46:00+00:00

Reading Time: < 1 minute

Wisconsin Watch, a nonprofit newsroom, is partnering with Gigafact to produce fact briefs — bite-sized fact checks of trending claims. Sign up for our newsletter for more stories straight to your inbox.

No.

While individual tax cuts from the 2017 Tax Cuts and Jobs Act are set to expire after 2025, 95% of business owners will not “automatically” experience a tax hike, because many businesses have no taxable income.

TCJA’s corporate tax cuts are permanent. However, most American businesses “pass through” their tax liability to their individual owners. In 2015, 95% of businesses, representing 63% of business income, were pass-through, according to EconoFact.

Pass-through business income would be taxed at a higher rate if TCJA’s individual tax cuts and 20% pass-through income deduction are allowed to expire.

In this scenario, pass-through businesses that turn a profit would see their taxes increase. But tax expert Matt Gardner points out that “many, many businesses each year don’t turn a profit” and therefore “have no taxable income to pass through.”

Less than two-thirds of small businesses were profitable in 2022, according to the Chamber of Commerce.

This Fact Brief is responsive to conversations such as this one.

Sources

Investopedia Explaining the Trump Tax Reform Plan

EconoFact The Other 95%: Taxes on Pass-Through Businesses

Investopedia How the TCJA Tax Law Affects Your Personal Finances

DocHub ITEP Matt Gardner Response

Chamber of Commerce Small Business Statistics

[END]
---
[1] Url: https://wisconsinwatch.org/2023/05/will-taxes-automatically-go-up-for-95-of-business-owners-after-the-trump-tax-cuts-expire/

Published and (C) by Wisconsin Watch
Content appears here under this condition or license: Creative Commons BY-ND 4.0 Intl.

via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/wisconsinwatch/

You are viewing proxied material from magical.fish. The copyright of proxied material belongs to its original authors. Any comments or complaints in relation to proxied material should be directed to the original authors of the content concerned. Please see the disclaimer for more details.