Tax bill isn’t perfect, but a step in the right direction toward helping women entrepreneurs
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While far from perfect, tax reform measures passed by the U.S. House and Senate undoubtedly contain some benefits for small businesses, which comprise 95 percent of all U.S. companies and require an equitable tax structure to help grow our economy through job creation and investment. Because nine out of 10 women entrepreneurs own small businesses, they may be wondering what is in store for them.

A conference committee comprised of House and Senate members is charged with sorting out differences between the two plans in hopes of sending a compromise package to the White House by year’s end. We hope these lawmakers will take advantage of this rare opportunity to strengthen provisions for women entrepreneurs.

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Women Impacting Public Policy (WIPP), a nonpartisan voice for women business owners, commends the House and Senate for including the first-ever carve out for pass-through entities—a provision WIPP has been advocating for for years. Most notably, we believe the Senate version, which gives a 23 percent deduction for qualified pass-through income, will benefit more small businesses than the 25 percent rate featured in the House bill. This action is an important first step in recognizing that women-owned small businesses, the majority of which are organized as pass-through entities, should be treated more fairly in the tax code.

Also worth noting is the substantial increase in the estate tax threshold in the Senate bill, with the House version calling for elimination of the tax by 2025. WIPP has been a consistent voice in the halls of Congress to raise the threshold or eliminate the tax due on operating small businesses to reduce the burden created for families passing down businesses through the generations.

Establishing a pass-through rate and reforming the estate tax begins to level the playing field for women. Despite their growing numbers, women have been disadvantaged by the tax code for decades because of the types of businesses they tend to own and operate.

Women-owned businesses have more than doubled in number—from 4.1 million to 10 million—since Congress last overhauled the tax code in 1986. Women now own more than a third of all U.S. firms, employing 8.4 million people and accounting for $1.6 trillion in revenues. Yet, the complexity of the tax code has resulted in a disparate impact on women businesses. The reforms currently in play begin to resolve some areas of inequity.

Recent research that included a survey of 515 WIPP-affiliated women business owners nationwide shows the majority of those business owners do not fully benefit from key tax code provisions. The survey revealed that a majority of women entrepreneurs own service-based businesses that are not legally organized as C-Corporations and don’t benefit from the kind of tax breaks or rates enjoyed by corporations.

We urge Congress to make women business owners a priority during the conference committee process and consider making the pass-through provision equitable to the corporate rate reduction. That includes the Alternative Minimum Tax (AMT). If Congress eliminates the corporate AMT, it should be eliminated for pass-throughs as well. Steps such as this will help stimulate investment in all businesses, large and small.

Lastly, there is an astounding lack of research about how women business owners use the tax code overall. Congress cannot make evidence-based tax policy decisions to explicitly help women-owned firms without the research.

As reform makes its way through Capitol Hill to the president’s desk, we have a once-in-a-lifetime opportunity to require additional research on the tax code’s impacts on women business owners. Let’s seize it.

Jane Campbell is the president of Women Impacting Public Policy (WIPP) and director of the Washington, D.C. office of the National Development Council