Far from buoying small businesses, the new tax law Republicans passed late in 2017 is proving to be more problematic than positive for Main Street.
“Small business owners are what drive Oregon’s economy forward. They need a simpler, fairer tax code to grow and thrive,” said U.S. Sen. Wyden, ranking member of the Senate Committee on Finance. “Trump’s tax law did the opposite."
Ryan recently joined the Main Street Alliance and small business owners in releasing a new report on the Tax Cuts and Jobs Act.
The report highlights how Republicans’ choice to slash taxes for multinational corporations will bring financial harm to small business owners, employees and customers.
"It’s more proof that this administration will continue to enrich the donor class at the expense of the middle class," Wyden said.
After working with thousands of small business owners across the country, Main Street Alliance found:
The total impacts of the tax law on small businesses’ bottom lines far outweigh the nominal tax cuts most anticipate receiving.
The view from Main Street is very different than the view from Wall Street. The majority of small business owners surveyed say they need more customers, not tax cuts, in order to hire and expand, and call for stability and strong public investment as the way to sustainably grow a business.
To ensure an equitable economy that works for small businesses, large corporations and wealthy individuals must also pay their fair share of taxes. This means corporate tax loopholes must be closed, not skewing the tax code even more in their favor.
"Strong public investment in areas like childcare, health care and infrastructure are necessary for building the type of equitable economy that small business owners need to grow and thrive. But where are we going to get the money for public investment after Republicans cut trillions in tax cuts for large corporations and the richest individuals? Without significant changes by Congress, this tax law will likely hurt Main Street for decades to come," said Amanda Ballantyne, national director of Main Street Alliance.
The report also dismantles the argument that the new 20 percent deduction for pass-through income will help the vast majority of small businesses create jobs or expand.
The national median income for a typical business is $50,000 — so these people are likely to see hikes in their health insurance premiums that far outweigh any small tax cut they may receive.
Overall, however, income from pass-through businesses skews heavily to the very wealthy, with 70 percent of pass-through income accruing to the top 1 percent of income earners — these are the hedge fund managers and Wall Street lawyers who are also “pass-through” income earners.
Wealthy “business owners” stand to benefit far more from this new deduction than real small business owners.
"If our national leaders really want to help small business, they would stop giving us phony tax cuts and look to the financial institutions that are not loaning to small businesses,” said Deborah Field, owner of Paperjam Press in Portland, Oregon. “As long as small business can’t get cash to grow their business they will continue to be less competitive while struggling to bring enough profit to the bottom line to even have to pay taxes.”