(Reuters) - The top tax law writer in the House of Representatives will pitch a plan to revamp the taxation of many small businesses, and some large ones, on Tuesday in his latest bid to rewrite the tax code.
Dave Camp, chairman of the House Ways and Means Committee, has said he wants to pass tax reform legislation this year. But the Michigan Republican faces an uphill climb with his party and the Democrats deeply split on tax-and-spending policies.
Camp's plan, not yet released, will seek to overhaul small business taxes, but also cover businesses not organized as traditional corporations, often known as "pass-throughs."
These businesses include structures such as partnerships, in which profits are not retained by the business or distributed to corporate shareholders, but rather, are passed through to the partners, who are taxed on that income. The top income tax rate since the beginning of the year is 39.6 percent.
That is higher, by contrast, than the top corporate income tax rate of 35 percent, though many large corporations do not pay that rate thanks to tax breaks for selected industries.
Pass-throughs range from Mom-and-Pop storefronts to global hedge funds and law firms. About 53 percent of the $1.3 trillion in total business income in this category will be reported in 2013 on returns of taxpayers earning at least $200,000, according to the nonpartisan congressional Joint Committee on Taxation.