The tax reform introduced Thursday by Republicans in the U.S. House of Representatives has been met with skepticism by local business and nonprofit leaders.
Two days before it was released, the Loudoun County Chamber of Commerce issued a statement calling on Congress to reform the federal tax code.
“It has been 31 years since Congress last reformed the tax code,” the Chamber wrote. “Since then, the code has become an anchor weighing down the economy, job creation, and wage growth for American families.” It wrote that Congress has a “once-in-a-generation” opportunity to fix the problem.
But the day after the 429-page “Tax Cuts and Jobs Act” was released, and as reporters and organizations continue to dig through the bill, Chamber president and CEO said it could hurt small businesses and nonprofits. The bill has been criticized for giving large tax breaks to large corporations and the country’s wealthiest people, while giving smaller or no cuts for low- and middle-income people and passing over some small businesses.
“I’m concerned that there’s not enough for small businesses,” Howard said. “At least based on the media reporting I’m seeing, it actually creates some negative scenarios.”
It also appears the tax bill could negatively impact charitable giving by limiting deductions—such as for donating to charity.
“You have now disincentivized folks to make charitable contributions on a tax basis,” Howard said. “Now, I know the old saying that real charity doesn’t care if it’s tax deductible, but let’s not be foolish about it.” He said charities are “a big part of the fabric of the social safety net in our country.”
That was troubling news to Amy Owen, executive director of the nonprofit Community Foundation for Loudoun and Northern Fauquier Counties.
“When we work with individuals who are interested in making a gift, one of the first questions that people always want affirmed is, is this tax deductible,” Owens said. She added that is not their first motivation for giving, but “to have that acknowledgement to maintain that culture of giving though our system is a really strong reinforcement for donors.”
Howard said the bill as written has dim prospects for passing, pointing to negative comments from the National Federation of Independent Businesses, and lukewarm reception from the U.S. Chamber of Commerce.
“If the majorities in the House and Senate as well as the executive branch are seeking to bet a bill like this through, and they don’t have the full support of an ally like the U.S. Chamber in that, I really question how they get the bill through,” Howard said.
But the need for tax reform, he said, is real.
“I would say that, quite candidly, there’s no doubt that the tax code needs to be simplified,” Howard said. “It needs to be made easier to understand, it needs to be done in a way that encourages economic activity that not only provides job and entrepreneurial opportunities for American citizens, but also will lead to additional tax revenues down the road.”