Small businesses are struggling in the Biden economy. Inflation remains at record highs thanks to trillions in wasteful spending, labor shortages persist due to taxpayer-funded handouts that reward welfare over work, and burdensome compliance costs continue to squeeze already thin profit margins.
When our small businesses – which employ nearly 62 million workers – endure tough times, our families tighten their budgets and our economy stagnates. In the face of ridiculous attempts to saddle our small businesses with higher taxes and more red tape, Republicans have concrete solutions to support small businesses, create jobs and grow our economy.
According to the U.S. Chamber of Commerce’s Q1 Small Business Index, 54% of small-business owners reported that inflation remained their top challenge. This comes as no surprise as increased operating and inventory costs strain budgets, pinch payrolls and discourage pro-growth investment. Coupled with runaway inflation, the National Federation of Independent Business reported that 43% of small businesses continue to struggle to fill vacant positions. These findings support the most recent JOLTS report, which found that roughly 9.9 million jobs remain unfilled nationwide. Even worse, optimism about the economy has also cratered, with 4 in 5 small-business owners agreeing that economic conditions are bleak. The data is clear; small businesses need immediate relief to grow and thrive.
This month, at one of our “State of the American economy” field hearings in Peachtree City, Georgia, my Ways and Means Committee colleagues and I heard from small-business owners who are facing significant challenges due to the Biden administration’s tax-and-spend agenda. In my remarks, I focused particularly on the need to make 100% bonus depreciation – which allows small businesses to deduct 100% of the purchase price of eligible capital investments and other assets – permanent. This policy was implemented as part of the 2017 Tax Cuts and Jobs Act but has since expired.
According to the nonpartisan Tax Foundation, making 100% bonus depreciation permanent would create 100,000 jobs, boost wages and grow our economy. One hundred percent bonus depreciation permanency would also help small businesses offset the cost of major investments and instead hire new employees and expand their operations domestically. Between rising costs and labor shortages, we should encourage small businesses to invest in their growth by purchasing cutting-edge technology and other assets, and in turn, increasing their productivity and profitability.
Another tool we can deploy is the permanent reauthorization of the 20% deduction for qualified business income, or QBI, also known as pass-through income, beyond its 2025 expiration date. Like 100% bonus depreciation, this provision was created through the TCJA, under Internal Revenue Code Section 199A, to let small businesses keep more of their hard-earned money and alleviate the destructive impacts of inflation. In the six years since its implementation, the reception has been resoundingly positive. In 2020 alone, more than 21 million taxpayers – including nearly one-fifth of all individual tax returns in my district – claimed the 20% QBI deduction, a 3 million claim increase from 2018. Based on calculations by the Tax Foundation, making Section 199A permanent would also add nearly 58,000 new jobs and increase wages for small-business employees.