On March 3, the House Ways and Means Subcommittee on Select Revenue Measures will hold a hearing on the "special burdens that the tax code imposes on small businesses and pass-through entities and the need for comprehensive tax reform to address these problems." In announcing the hearing, Subcommittee Chairman Pat Tiberi (R-OH) said, "Today, more than half of all business income earned in the United States is earned by pass-through entities, the vast majority of which are small businesses. While I applaud President Obama’s interest in pursuing corporate tax reform, we cannot ignore the special problems faced by small businesses that must devote scarce resources to tax compliance and tax planning instead of to business expansion and job creation. This hearing will allow the Committee to better understand these issues." The witness list has not been announced.

  • According to the Subcommittee’s press release, "Some advocates of tax reform have suggested limiting that effort solely to corporate tax reform while postponing consideration of reforming the individual income tax. Such an approach ignores three important facts: (1) more than half of active business income earned in the United States is earned by pass-through entities (sole proprietorships, partnerships, and S corporations) and is therefore subject to the individual income tax rates, not the corporate rate; (2) business tax preferences that presumably would be curtailed to offset the revenue loss caused by a reduction in the corporate rate generally are available to pass-through entities as well, meaning that such entities (most of which are small businesses) could end up paying higher taxes to finance a cut in corporate income taxes; and (3) small businesses face a tremendous administrative burden in complying with the tax code, as they must comply with rules designed for large corporations, even though they often have only a fraction of the resources."