Tax reform is likely to lead small businesses (SMBs) in the U.S. to pay more for accounting services, according to new analysis from the Senate.
Reports in Accounting Today said Senator Ron Wyden (D-Ore.), ranking Democrat on the Senate Finance Committee, released a report on the impact of tax reform on small businesses. Wyden’s report, “Tax Code and Small Business: Even More Bizarre and More Unfair than Before,” is a clear attack on the Republican-led tax law.
In his analysis, the senator found small businesses are likely to spend more on accounting services, which could detract from their focus on business growth.
“Republicans claim to want less government intervention, but with their new tax law, they picked winners and losers — architects are in, accountants are out; engineers made the cut, doctors did not — leaving business owners wondering whether or not they were blacklisted,” the report stated.
The revised tax code provides a 20 percent deduction to businesses, but for accountants, lawyers, doctors and other service providers, that deduction is capped to a certain income level.
“What good is a deduction if money spent in annual fees to your accountant far exceed the tax break?” Wyden wrote. “Main Street job creators will be lucky if they figure out how to calculate their deduction any time soon.”
The senator also pointed to analysis from Businesses for Responsible Tax Reform that found a majority of SMBs surveyed do not believe tax reform will benefit their business and lead to growth.
Republicans have touted tax reform as a major boost to the small business community, saying tax cuts will lead small businesses to reinvest that money into their own companies and into new hiring.
CNBC and SurveyMonkey analysis released last month found a third of Americans hope SMBs will indeed use the tax breaks to boost payroll; small businesses pointed to paying down debt and investing in equipment and equipment repairs as their top focuses for making use of tax breaks.