Small businesses have a friend in President Trump. In a recent speech before the National Association of Manufacturers, Trump promised “huge” tax relief for small businesses, calling his proposed 25 percent cap on tax rates “the lowest top marginal income tax rate for small- and medium-size businesses in more than 80 years.” It is, as he put it, veritable “rocket fuel for our economy.”
The president is absolutely right. Small businesses have more than earned a tax break. For decades, they’ve had to pay the highest possible marginal individual rate on their income, thanks to a tax code that treats them as “pass-through” entities. Almost all of the nearly 30 million small businesses in the United States get taxed this way, handing the taxman as much as half of their income once state and local levies are factored in.
Reducing that share to just 25 percent will reap big benefits — not just to our unfairly overburdened small businesses but also to Main Street, where voters know they gain when small businesses keep more money.
In a poll by the Wall Street Journal, small business tax cuts not only enjoy majority support but are 17 percentage points more popular than tax cuts even for respondents’ own families — a reflection of public confidence in the broad-based economic power of small business.
Congressional leaders get the picture too. The legislative framework put forth by Republicans recognizes that “small businesses drive our economy and our communities, and they deserve a significant tax cut.”
Members of the Associated Builders and Contractors appreciate the transformative effect of tax cuts. But even a perfect blueprint is just a means to the end of a completed structure, whereby people can flourish in their work and home life. Congress needs to get tax cuts off the page and into the hands of the businesses Americans count on to grow the pie nationwide and bolster economic growth in our neighborhoods.
Michigan is a shining example of what small business does for us all.
Here, according to the latest numbers from the Small Business Administration, small businesses employ half of the 3.6 million employees in our private-sector workforce, and make up over 99 percent of all our businesses.
Small businesses are inherently optimistic. They want to grow, and they’re close enough to their communities to see up close and personal how their growth improves lives. But without action on taxes from Congress, the outlook of America’s small businesses only grows cloudier. Hiring and anticipated expansion have dipped, according to the new midyear economic report released by the National Small Business Association.
“The absence of any meaningful legislating is a driver of changes in anticipated growth,” National Small Business Administration President and CEO Todd McCracken said, “and is the reason why small businesses believe the first thing Congress and the administration need to address is ending the partisan gridlock.”
Voters agree that lawmakers have an obligation to enact tax cuts now. Three-fourths of Americans want tax relief with results like more hiring and more growth, an American Action Network survey revealed, with 70 percent of Democrats agreeing tax relief is a bipartisan priority.
Meanwhile, research shows small businesses are ready to use tax savings to deliver the increased productivity Americans want out of a tax bill. In a new Job Creators Network poll, most small business owners say they’d put tax relief to use hiring employees, making new investments, boosting paychecks or adding locations.
The blueprint for success on taxes is clear. Let’s turn that blueprint into law.
Jimmy Greene is president and CEO of the Associated Builders and Contractors’ Michigan chapter. He wrote this for InsideSources.com.