Small businesses face a precarious tax future, making it increasingly difficult for these enterprises to plan effectively. The U.S. House Budget Committee heard these concerns from Kevin Kuhlman, NFIB Vice President of Federal Government Relations, during a hearing entitled, “Reigniting American Growth and Prosperity Series: Incentivizing Economic Excellence Through Tax Policy.”
Kuhlman emphasized that unless Congress takes timely action to extend the beneficial tax provisions from the Tax Cuts and Jobs Act (TCJA) of 2017, small businesses across the country will face a detrimental and substantial tax increase, dealing a harsh blow to an already uncertain economic environment. Most of these provisions, critical for sustaining small businesses, are set to expire in 2.5 years.
“Small businesses received significant tax relief upon the enactment of the Tax Cuts and Jobs Act of 2017,” Kuhlman stated, reminding the committee of the positive impact of these measures. He highlighted that over three-quarters of businesses are organized as pass-through entities. This means the business income is passed through to the owner’s income tax return and taxed at the respective individual rates. These businesses typically reinvest a significant portion of their post-tax income into their business and workforce.
Adding to the urgency of maintaining the small business tax provisions of the TCJA, Kuhlman also pointed out the negative implications of the proposed tax increases on small businesses included in President Biden’s Fiscal Year 2024 Budget Request. In response to these proposed tax increases, NFIB mobilized an initiative that saw over 21,000 small business owners from across the country sign a petition opposing the “Small Business Surtax” and voicing their collective stand that “small business is not a tax loophole.”
During his testimony, Kuhlman further emphasized the importance of making the Small Business Deduction permanent. If made permanent, this provision could provide a much-needed buffer against the proposed tax increases and would be a crucial move in solidifying the future of small businesses in the United States.
With small business owners’ expectations for future business conditions remaining low, Kuhlman’s testimony served as a crucial reminder to Congress that extending the beneficial small business tax provisions can help to mitigate current economic challenges. The discussion before the U.S.
House Budget Committee marked a critical point in the dialogue about the role of tax policy in fostering the growth and prosperity of the small business sector. It served as a strong representation of the NFIB’s ongoing commitment to advocating for the needs and interests of small businesses in the face of a rapidly changing economic and tax environment.
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