SBE Council and Allies Call on Washington to Defend Main Street Growth

By SBE Council at 21 October, 2024, 7:12 pm

New Coalition Highlights the Positive Benefits of 2017 Tax Reforms for Small Businesses

By Karen Kerrigan -

Leading the Small Business & Entrepreneurship Council (SBE Council) for several decades now has been an exhilarating honor. Through recessions, political change, a pandemic and technological disruption, small business owners and entrepreneurs have guided our work and helped SBE Council more effectively communicate what Main Street needs from lawmakers and policymakers - especially in Washington, D.C. - to help their businesses compete, grow, and succeed.

The 2017 Tax Cuts and Jobs Act (TCJA) was an important policy measure where SBE Council was joined by thousands of small business owners in our efforts to push the legislation through Congress and to the President's desk. The 2017 tax law's provisions have been critical to small businesses, especially in helping our businesses weather the pandemic downturn, inflationary pressures, and general economic uncertainty. Small business owners agree that education is critical in helping Congress understand the benefits of the package. Some areas need a bit more focus than others. For example, the lower corporate income tax rate and investment incentives have had an enormously positive impact given the sheer number of small businesses, local economies, and the business ecosystem in general that have benefitted from these important reforms.

Passage of the 2017 tax law occurred because entrepreneurs and small business owners played an active role in advocating for its passage. When Congress convenes next year to debate and consider extending the various provisions of the package that expire in 2025, entrepreneurs and small business owners need to step up once more to defend the 2017 law. That is why SBE Council has launched Defend Main Street Growth, a coalition of small businesses organizations and leaders from across the country who will share their stories about how the 2017 law has positively impacted their businesses.

Entrepreneurs and Main Street business owners are worried that Washington doesn't understand what they need in terms of pro-growth, protective policies that will help them grow and succeed. Changes to the corporate income tax rate, for example, affect over one million businesses, 90 percent of whom employ fewer than 20 employees. As we've seen in the various 2024 election-year platforms and statements from candidates at the "top of the ticket" down to congressional races, both political parties have pledged changes to the tax code.

In the United States, full cost recovery for machinery and equipment investment is phasing out, a new tax penalty for R&D has taken effect, and the headline corporate rate when including the average of state and local rates already sits higher than China's headline rate.^[1] Washington needs to focus on restoring and protecting lower taxes and investment incentive provisions for all businesses. Not raising taxes.

The possibility of offsetting "revenue losses" by raising the corporate income tax rate from its current 21% is counterproductive and could undermine the very competitiveness that the 2017 law sought to enhance. Lowering the tax burden on American companies worked! It put wage growth at historic highs and unemployment at historic lows despite every attempt to argue otherwise. The U.S. economy has proven to be more resilient than our international counterparts. Why go back?

The success of the TCJA for America's small business entrepreneurs has been thoroughly documented, yet political grandstanding and irrational economic proposals are distorting the facts and rational foundation that lowered the corporate tax rate. The 21% corporate has created significant and wide-spread benefits. The large swath of U.S. small business C-corps and the millions of small business suppliers to C-corps of all sizes are very concerned about the possible turn to higher rates and the damaging effects to the U.S. business ecosystem.

Congress must understand that the dynamism of the American economy hinges on a tax system that encourages investment, innovation, and growth. The U.S. economy and our businesses are more resilient and stronger as a result of the 2017 reforms. That is the story Main Street businesses will share with Congress in our work to keep the current tax-code competitiveness intact.

With our launch of Defend Main Street Growth, we invite small business owners from across the nation to join us in sharing their stories and experiences. Together, we will ensure that Washington understands the vital role the 2017 tax law has played in strengthening local economies and fostering business growth. By amplifying small business voices, we will work to bolster an environment where small business owners are more confident, competitive and thriving. We look forward to working alongside you advocating for policies that support innovation, resilience, and prosperity on Main Streets everywhere.

Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council.

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