Heinrich: Congress must keep small business tax deduction

Faced with a larger tax bill, small businesses would have to hold the line on pay and benefits, halt growth plans and possibly cut jobs.”

The record inflation that we have all experienced in our day-to-day lives also adds to the wall of worry for small business owners. Small business owners recently ranked the cost of supplies and inventories as their second-most pressing problem — moving way up from its ranking as 12^th in 2020.

With increasing costs, owners are faced with basically three difficult choices: raise prices, cut jobs or close up shop for good.

It’s bad, and there’s a federal law set to expire that would make today’s “bad” even worse for Arizona’s local businesses.

When Congress passed the Tax Cuts and Jobs Act of 2017, they included a provision allowing small businesses to reduce their taxable business income by 20% — it’s called the small business deduction.

This policy has had a positive impact on communities. Following the law’s implementation, small business owners told us they used the tax savings to increase employee pay, expand their business operations and hire additional employees.

Congress enacted the small business deduction to help level the playing field between Main Street businesses and big corporations, but the big business tax cuts were made permanent, and the small business deduction wasn’t. It’s set to expire in 2025.

If Congress allows the small business deduction to expire, it will mean that they intend to enrich Wall Street and leave Main Street businesses behind. Losing the small business deduction could very well be the largest federal tax increase on small businesses in memory.

Just like we all have had to pinch pennies and live with less due to this economy’s record cost increases; a tax increase of this magnitude would force small businesses to make drastic cutbacks.

Faced with a larger tax bill, small businesses would have to hold the line on pay and benefits, halt growth plans and possibly cut jobs. Given the tremendous financial pressure they’re already under, some may be forced to close their doors for good.

That’s why Arizona’s small businesses are asking Congress to pass the Main Street Tax Certainty Act. This bipartisan bill would make the small business deduction permanent.

Small business owners need stability to succeed. The past four years have been turbulent. With no guarantee the small business deduction will be around after 2025, small business owners are starting to make tough decisions now to prepare for a massive tax hike later.

By passing the Main Street Tax Certainty Act, Congress can stop the cycle of uncertainty and provide small business owners with the predictability they need to grow their businesses.

The Main Street Tax Certainty Act is bipartisan legislation that would create certainty in the tax code for Arizona’s small businesses.

Some of Arizona’s congressional delegates support the bill, but there are still some holdouts. Representatives David Schweikert, Juan Ciscomani and Debbie Lesko are co-sponsors in the House. We’re asking Sen. Mark Kelly to stop this massive tax hike on Arizona small business owners and support the Main Street Tax Certainty Act.

That’s important because small businesses play a vital role in Arizona’s economy. Remember: When we help small businesses, we help everyone.

Editor’s note: Chad Heinrich is the Arizona State Director of the National Federation of Independent Business and managing partner for Heinrich Public Affairs in Phoenix. Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.