Juanita Duggan, NFIB CEO: The tax cuts are working for America's small businesses -- Here's proof
FOX Business’ Jakie DeAngelis on the best and worst tax states in America.
The 2017 tax cuts are a big win for small business. That’s the conclusion of a new survey out this week from the National Federation of Independent Business, one of the first to rank small businesses’ experience under the nearly two-year-old law. Our members overwhelmingly told us that the Tax Cuts and Jobs Act is a success.
Small businesses, of which there are about 30 million in the U.S. employing 60 million workers, needed tax cuts going back years. For decades prior to the law’s passage, our members told us that “federal taxes on business income” was one of the three most pressing problems they faced. The law gives them relief, especially the Small Business Deduction, an up to 20 percent deduction on business income for pass-throughs. The NFIB secured that key policy in the final bill because we knew it would provide a more level playing field with big corporations.
Our survey found that 82 percent of small business owners see the tax cuts as having a positive effect on the economy. Two-thirds also said the tax cuts had a valuable impact on their own firm. For small businesses with more employees, the impact was even more valuable, with north of 80 percent reporting an improvement. By comparison, less than 1 percent of small businesses experienced “very negative” consequences.
More important is what our members did with the savings. Most firms that reported a lower tax bill turned around and invested the money right back in the business.
The most common action was a pay raise for workers. More than a quarter of companies, and nearly 50 percent of the larger small businesses raised wages. A similar percentage expanded their operations or bought new equipment, increasing their competitive edge and allowing them to serve more customers. Over 15 percent hired new employees, contributing to the strong national job growth of the past two years.
About a fifth of small businesses paid down debt obligations, setting themselves up for future success on a faster timeline, and 27 percent of companies retained the tax savings as earnings. As for the small businesses that did not report taking concrete action, they told us that while it’s “too soon to tell” their plans, they still intend to spend the savings in productive ways.
Looking ahead, we expect small businesses to continue to invest more in their operations, their workers, and their communities. For instance, NFIB’s Small Business Economic Trends survey found that small businesses accelerated job creation in August. Yet our members also tell us that economic uncertainty is on the rise. While the causes are many, a growing concern is the future of the tax cuts themselves.
Small businesses have two primary fears, one short-term and one medium-term. Some presidential candidates have promised to repeal the tax cuts, even as their first act in office. While this may not occur, most of the law’s pro-small business provisions will expire at the end of 2025. Many small firms will likely hit the pause button as that deadline approaches.
Our survey shows cause for renewed celebration of the Tax Cuts and Jobs Act. Yet it’s not too early for Congress to make permanent its most important parts to small businesses, which means passing the bipartisan Main Street Tax Certainty Act. Millions of small businesses will benefit, and so will the tens of millions of people who depend on them every day.
Juanita Duggan is president and CEO of the National Federation of Independent Business.