Tax cuts a big win for Main Street, Congress
The White House and congressional leaders are hard at work on a tax package. It’s clear what works best for Main Street: Small business tax cuts.
The Trump administration has led on the issue, guiding the conversation toward a 25 percent small business tax rate. Now, it’s time for Congress to follow through before the year-end legislative session is over.
Just about everyone agrees small business is the backbone of the American economy, but the numbers are probably even more impressive than you think. Half of the national work force-about 60 million people-is employed by one of America’s nearly 30 million small businesses. That’s an eye-popping 99.9 percent of all companies, generating over $470 billion in exports every year.
Small business is king in Ohio, too. More than two million Ohioans work at one of our nearly 930,000 small businesses, which make up a similarly significant 99.6 percent of all our firms.
But this tremendous economic power is being held back by an outdated and onerous federal tax code. As “pass-through” entities, many small businesses are taxed at the highest possible individual rate, which can rise to 40 percent or beyond. Money that would otherwise fund new jobs, higher wages, and better facilities instead goes to the taxman-or the accountant many small businesses need just to make it through tax season in one piece.
State officials, like me, know that’s unfair and unsustainable. President Trump and Mick Mulvaney, director of the Office of Management and Budget, anticipate tax cuts alleviating the burden on small business and pushing economic growth to new heights. “If we want to get America’s economy growing at that three to five percent rate,” Ohio Rep. Bill Johnson recently remarked, “we have got to empower small businesses to innovate, to grow and expand again.” Rep. Steve Chabot, who chairs the House Small Business Committee, said “the biggest barrier to taking the leap is our broken tax code.”
Small business owners are crying out for relief. Four in five told the National Small Business Association that reduced rates and increased deductions topped their list of tax priorities.
Voters are right there with them. Large majorities have agreed in recent surveys that the current tax code treats people unfairly and tax cuts fueling local and national growth should be part of congressional action this year.
The nation’s tax code hasn’t been updated in over thirty years, when President Reagan did it in 1986. Here in Ohio, we’ve done better, pulling down tax burdens by more than $5 billion since 2011. It’s been the largest tax cut of its kind in the country, and the results have been strong.
But neither Ohio nor any other state can deliver tax relief to small business and the families who depend on them at a national level. That’s up to Congress.
Lawmakers are looking for a big win this year that doesn’t chew up too much time or bog them down in a maze of complex regulations. Tax relief is the right issue. Tax cuts for small businesses put us on the path to success.
Andy Thompson, a Republican from Marietta, is the state representative from the 95th district of Ohio.