When Republican Presidential nominee Donald Trump unveiled his tax plan in Detroit in early August, he proposed a reduction in the corporate tax rate from 35 percent to 15 percent for all businesses. But that changed yesterday when he outlined a new tax plan in a speech to the Economic Club of New York.

Trump rolled back his earlier proposal to reduce corporate taxes and a number of news organizations–Vox Media, CNN and the New York Times, among others–suggested that some small businesses will get a smaller tax break than envisioned under Trump’s earlier tax plan.

Trump still proposes a 15 percent tax on corporate income, but the Times noted that the 15 percent rate would no longer apply to business income reported on personal taxes, typically on Schedule C, which is the way many small businesses report their income.

As Vox noted,  Trump had previously proposed subjecting C-corporations, which currently pay the corporate income tax, and “pass-through” entities, whose earnings are distributed to shareholders who then pay ordinary income tax, to his new 15 percent corporate tax.

Trump’s new tax plan, Vox reported, “does away with this [pass-through] element taxing only C-corporations at the 15 percent rate and having pass-through companies instead merely benefit from the lower individual rates.” (The current top individual rate would be reduced from 39.5 percent to 33 percent, a much smaller decrease than the proposed new corporate tax rate.)

According to the Tax Foundation, pass-through businesses earn more net income than C-corporations and the number of pass-through businesses–which include sole proprietorships, partnerships and limited liability companies–has nearly tripled since 1980, while the number of C-corporations has declined.

Vox suggested that if pass-through entities were included in the proposed 15 percent corporate tax rate, it would have amounted to a “massive tax cut for the rich” because about 69 percent of pass-through income goes to the top 1 percent of earners.

The National Federation of Independent Business (NFIB), which bills itself as the leading small business association, is apparently on board with the new changes in Trump’s plan.

In a press statement attributed to to NFIB’s president & CEO, Juanita Duggan, she said: “We strongly support Mr. Trump’s proposal to create a single business tax rate that would create parity between small businesses and their larger competitors. We are also strongly supportive of his plan to reduce the tax burden on small businesses and simplify the code.”

So, to sum up, Trump’s new corporate tax rate may create more parity between corporations and some small businesses, but certainly not all small businesses.

 

 

 

 

 

The end is in sight for legislation that will make it illegal for companies to put so-called “gag orders” in their customer contracts to prevent customers from sharing their honest opinions with others, the website Consumerist reported on Monday.

On September 12, by a simple voice vote, the House passed the Consumer Review Fairness Act, a bipartisan bill that would void any non-disparagement clauses in consumer contracts and gave the FCC and state attorneys general authority to take enforcement action against businesses that attempt to use such clauses to silence the voice of consumers.

Similar legislation was passed unanimously in the Senate in December 2015. A reconciliation of the House and Senate bills is expected to pass easily and sent to President Obama, who has indicated support.

A number of businesses have inserted provisions into contracts and terms of service declaring that if the customer writes or says anything negative about the transaction–such as a review on Yelp–the company can seek damages.

The Consumerist reported the case that brought the issue into the spotlight involved a failed attempt by online retailer KlearGear to hit a customer with a $3500 penalty after she wrote a truthful but negative review of the company. A Texas petsitter sued a customer for $1 million after a negative review on Yelp.

Attorney Paul Alan Levy from Public Citizen, who was involved in both the KlearGear and Texas petsitter cases, told  Consumerist the legislation was a win-win for both consumers and small businesses.

It’s good  for small businesses, he said, “that do not need to paint a false picture of themselves by suppressing truthful criticisms in order to secure more customers, and for businesses harmed by competition from those businesses that do need to paint a fraudulent picture of themselves by using non-disparagement clauses.”

 

When you think about where the fastest-growing private companies are–and the jobs they’re creating–the Philadelphia region is probably not top of mind.

That may be changing. According to an analysis of Inc. Magazine’s latest Inc. 5000 list of fastest-growing private companies on its website yesterday,  the Philly metro area ranked No. 7 with 151 companies on the list, which was more than Boston, San Francisco, Seattle, Austin or Denver, all of whom are considered more well-known startup hubs.

And, according to Inc., this isn’t a one-year phenomenon. The magazine said that since the end of 2012, the fastest-growing private companies in the Philly metro area have added a whopping 57,000 new jobs, ranking it the No. 2 in overall job growth.

It’s unclear what has accounted for this hiring binge, but Inc. suggests that a lower cost of living and cheaper wages (in addition to good location and abundant amenities) are factors likely driving the hiring binge.

There are, however,  several caveats with regard to the jobs data, which is self-reported by the companies. As Inc. noted, the head counts include human resources companies, which may be overrepresented as employees on the payroll might not include actual company employees. Put another way, these companies tend to skew the numbers.

Inc. said the head counts are self-reported by each company as of the last day of 2015 and Inc. compares the data with that of year-end 2012. The definition of employee also includes seasonal workers receiving any level of benefits, such as basic paid national holidays.