These are challenging times for small businesses. We’re facing inflation, over-regulation, worker shortages, and more. But the situation could soon get even worse. Congress and the White House may let one of the most important small business tax cuts in American history expire, hitting us with an enormous tax hike.
As someone who’s been on Main Street for more than 50 years, I’m sounding the alarm. Next year, the centerpiece of the 2017 tax cuts will disappear. It’s the Small Business Deduction, and it lets Main Street job creators and mom-n-pop shops deduct 20% of our business net income. Fairness demanded this tax cut.
In that same law, Congress gave Wall Street corporations a massive tax cut of their own. Main Street needed relief, too. While big businesses still generally pay lower taxes than small businesses, this tax cut has made the playing field more level than ever before.
Impact of the Small Business Deduction
But the 2017 law didn’t finish the job. It cut corporate taxes permanently but made the Small Business Deduction temporary. When it disappears in 2025, we’ll find it harder than ever to build for the future, much less build up our communities.
I know how much the Small Business Deduction matters. My dad founded our rental company in 1972, when I was a junior in high school. I’ve worked at the business full time since 1977, after I graduated from college. When I look back at the past half-century, I can easily say that the 2017 tax cuts were a game-changer, and they couldn’t have come at a better time.
Here’s what we’ve done with all the savings:
- We’ve raised wages for our more than 30 full-time and part-time year-round employees, helping them keep up with inflation.
- We’ve been able to continue to hire and raise wages for the seasonal workers we hire in the summer when our business is the busiest.
- We’ve kept covering the full cost of health insurance, even though it rises by about 10% every year.
- We’ve bought a lot of new equipment, ensuring that we’re giving our customers the best rental equipment for their events.
- And we’ve been better able to weather the economic storm of the past four years.
That’s why Congress passed the Small Business Deduction: Because it empowers Main Street to grow and give back. This isn’t some tax cut for “the rich.” It’s a tax cut that benefits small businesses, our workers and our communities.
But all that growth — all this giving back — will disappear if the Small Business Deduction dies. We’re already pulling back in preparation for the worst. There’s too much uncertainty because Congress shows no signs of acting.
If our lawmakers continue to sit on their hands, we’ll soon be forced to hand a lot more money to the IRS. But that will leave us with a lot less money to invest in our team and handle the challenges we face from all sides.
Will that be fatal to my small business? Thankfully, no. We’ve been around long enough to have a solid foundation. But if we were a newer business, I’m not so certain. Many small businesses that started in the last few years have banked on this tax cut in these tough economic times. Now they’re facing one of the largest tax hikes in history.
They may not survive, even though America needs small business more than ever. Only Washington can save small business. Our leaders have already given permanent relief to Wall Street. Now they must do the same for Main Street.
Ohio’s lawmakers in Congress and the president — no matter who it is — must make the Small Business Deduction permanent. They have until the end of next year to act. Small businesses like mine are sounding the alarm. Washington should listen before it’s too late.
