Q: Which “small business” owners benefit from the Republican tax bill that passed the House this week?

  Hedge fund manager Jay Hatfield, photo by     Chad Batka for the NY Times

Hedge fund manager Jay Hatfield, photo by Chad Batka for the NY Times

Q: Which “small business” owners benefit from the Republican tax bill that passed the House this week?

A: Hedge fund managers like Jay Hatfield, pictured above. His firm has five employees and, according to its latest SEC filing, manages funds with close to $1 billion in assets.

What are informed people saying about small businesses and the Republican tax bill?

The House Republican bill would slash corporate tax rates to 20% - a rate that would apply to corporations structured as “C corporations.” Most small businesses have a different legal structure that means their income is taxed at personal income tax rates (we wrote about this last month). So Republicans devised a complicated formula that would allow pass through business income to be taxed at a 25% rate for income above $91,500 ($153,100 for couples). A spokesman for the National Federation of Independent Business said the average small business has only $75,000 in taxable income, so most small businesses cannot benefit from this Republican “small business tax break.” To really rub salt in the wound, passive owners who don’t work at their businesses could use the 25% rate on all their business income.

In sum, to anyone who believes this bill benefits small businesses, I have a bridge to sell you

-- Thanks to Gaelan, small business owner and proud Persister, for inspiring this week’s tax topic! --

- first published in the 11/19/2017 newsletter

Stephanie Lee