Small Business Prosperity Act of 2023 This bill modifies the tax deduction for qualified business income to (1) make such deduction permanent, (2) limit to 21% the top tax rate on qualified business income, (3) repeal the limitation on the deduction based on amount of wages paid, and (4) revise the definition of qualified trade or business to mean any trade or business other than the trade of business of performing services as an employee. The bill provides that a change in the organizational structure of a corporation is not a taxable event if there is no change among the owners, their ownership interests, or the assets of the organization, The bill repeals the estate tax after 2022.
Impact
If enacted, HB 108 would have significant implications for state laws regarding taxation. The permanent increase in the qualified business income deduction is expected to lower tax liabilities for many small businesses, potentially fostering increased economic activity and investment. The removal of limitations based on W-2 wages will allow more business owners to benefit from the deduction, regardless of the salaries they pay. This change may support a more equitable tax environment for small businesses, promoting growth and sustainability in local economies.
Summary
House Bill 108, also known as the Small Business Prosperity Act of 2023, aims to amend the Internal Revenue Code to enhance tax benefits for small businesses. The bill proposes making permanent the deduction for qualified business income, increasing the deduction percentage from 20% to 43%, and repealing existing limitations related to the wages paid by businesses. By revising the definition of qualified trades or businesses, the act intends to diversify the types of entities that can qualify for these deductions, emphasizing support for small business owners and their contributions to the economy.
Contention
While the bill has garnered support for its potential to stimulate small business growth, there are notable points of contention. Critics may argue that such tax breaks could disproportionately favor wealthier individuals or corporations that are able to take advantage of these deductions more effectively than smaller entities. Additionally, the repeal of the estate tax could raise concerns over potential impacts on wealth distribution and public revenue. Overall, the conversation surrounding HB 108 is likely to focus on balancing the interests of small businesses with the broader economic implications of tax policy.
Related
Securities and Exchange Commission Real Estate Leasing Authority Revocation Act This bill revokes the authority of the Securities and Exchange Commission (SEC) to lease general purpose office space and instead provides for the General Services Administration to lease such space for the SEC. The bill's provisions do not affect those leases entered into by the SEC before this bill's enactment. The Government Accountability Office must (1) complete a review under which it shall update a 2016 report with respect to independent leasing authorities, and (2) report to Congress on the review.
Small Business Advocacy Improvements Act of 2023 This bill expands the primary functions and additional duties of the Office of Advocacy of the Small Business Administration to include (1) examining the role of small businesses in the international economy, and (2) representing the views and interests of small businesses before foreign governments and international entities to contribute to regulatory and trade initiatives that may affect small businesses.