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Hello John,
You’ve probably heard it a million times: Mom-and-pop businesses are the
backbone of the American economy. Well, it’s true. The numbers don’t lie.
Believe it or not, 99.9% of all businesses in the U.S. are small businesses —
some 33 million.
Nearly half of all jobs are with small businesses (66 million), which account
for40% to 50% of America’s gross domestic product.
Indeed, many of our biggest companies started out as small ones.
Tell Congress: Protect your tax cuts.
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The Trump tax cuts of 2017 were a boon for businesses of all sizes but
particularly small businesses:
* Around 85% of small business owners report
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benefitting from the Tax Cuts and Jobs Act.
* While 43% said it allowed their business to survive the Covid shutdown and
inflation.
It’s no surprise, then, that most small business owners said that uncertainty
around the tax law is making them rethink their business plans. They’re right
to be cautious.
Here’s the reality: If the Trump tax cuts are allowed to expire, America’s
small businesses would be hit especially hard. They are already dealing with
higher input costs and labor issues — they don’t need the added burden of
higher taxes.
Here are three ways the Trump tax cuts benefitted small businesses — and why
Congress needs to renew them.
First: Small businesses are usually organized as “pass-throughs,” which means
the income from the business passes through to the owners.
* It’s then taxed based on individual, not corporate, tax rates.
* Since letting the Trump tax cuts expire would raise individual tax rates
across the board, it would also raise taxes on small business owners, leaving
them less to reinvest in their businesses or hire additional workers.
Second: The TCJA created a 20% deduction for qualified business income, known
asSection 199A.
* This deduction was included to help make tax rates paid by pass-through
businesses more in line with those paid by larger businesses and corporations.
* Section 199A effectively lowered the income tax rate on profits for many
small business owners and helped them grow, hire more employees, and invest
more in their communities. According to the House Ways and Means Committee, if
this provision expires, some26 million small businesses
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would see their tax rate balloon to 43.4%. As the committee put it, that is
“more than 20 points higher than what businesses pay in Communist China.” Yikes!
Third: Not all small businesses are taxed at the individual tax rate — many
are taxed at the corporate tax rate.
* These are known as “C corporations.” The Trump tax cuts lowered the
corporate tax rate from 35% to 21%, making American businesses more competitive
globally.
* Before the Trump tax bill, America had one of the highest corporate rates
in the industrialized world, putting American businesses at a distinct
disadvantage. Now, our corporate tax rate is among the lowest.
Spot the inaccuracy: Some in Washington will try to raise the corporate rate
to get corporations to “pay their fair share.”
But here’s the truth: A higher corporate tax rate leads to a combination of
three things:
* lower wages for workers
* higher prices for customers
* lower returns for investors
These outcomes apply to small businesses as well as big ones. So, it’s
important that Congress at least keeps the corporate rate at 21%.
Small businesses are the lifeblood of our communities. If we’re going to
protect prosperity for decades to come, then we need to keep taxes low.
Please take a moment to ask your lawmakers
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to extend the 2017 Tax Cuts and Jobs Act. It only takes a moment, and we’ll
walk you through it.
SIGN NOW
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Small mom-and-pop businesses play a crucial and foundational role in the
overall health and growth of the economy. In many parts of the country, small
businesses are the primary support system for economic activity.
They have built their businesses around the tax code that was enacted in 2017.
We can’t change the rules on them without some dislocation and pain.
Let me close with a quote from certified public accountant Michelle
Gallagher’s testimony before the House Ways and Means Committee. She lays out
exactly why Congress needs to act — and act fast — to renew the Trump tax law.
“We have been running meetings and scenarios with our clients for months now,
trying to plan for the future. … It is imperative, as an advisor to these
folks, to be able to help them navigate these tax policies. I’ve been around 35
tax seasons, and I have experienced last-minute tax changes by our government,
and it is extremely frustrating. … I can’t encourage you enough to do this
swiftly and quickly to help our businesses and our farmers make some decisions.”
The time for action is now. Don’t wait.
Please take a moment to tell your lawmakers that you want to extend the TCJA.
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Best regards,
Joe Eule
Americans for Prosperity
Americans for Prosperity believes freedom and opportunity are the keys to
unleashing prosperity for all. We are a community of millions of concerned
citizens advocating for solutions based on proven principles to tackle the
country's most critical challenges.
Americans for Prosperity
4201 Wilson Blvd, Suite 1000
Arlington, VA 22203
This email was sent to:
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