Guest column runs in Cap Times
Make Small Business Tax Deduction Permanent for Wisconsin’s Sake
Small business owners all over Wisconsin recently learned from their accountants how much lower their tax bill was in 2019 as a result of federal tax reform. The Tax Cuts and Jobs Act created a small business tax deduction, a 20% deduction on business income which will save small businesses across the country an estimated $414 billion in ten years.
Nationally, there have been record job openings, plans to hire, pay raises, and other indications that the small business economy is on fire, and federal Tax reform is, in large part, responsible for the optimism.
When small business owners find they have more money in hand, they will reinvest those savings in their companies and their employees will benefit from higher pay, bonuses, or expanded benefits.
Tax reform is also impacting small businesses all over Wisconsin. Hiring is up, and more people are working. The most recent numbers show the state’s unemployment rate is 2.9%, which is considered “full employment” by economists. And, in just one year 19,300 jobs were added in our state.
The Tax Cuts and Jobs Act also encouraged small businesses to make purchases, like buying new equipment or bigger buildings, by broadening IRS expensing rules. And the law spared thousands of small business owners from costly federal death taxes by exempting many smaller estates. When a small business owner dies, death taxes can cause a business to close the heir can’t afford the tax bill. But federal tax reform changed that.
The economic surge of small businesses is good news for the Badger State. Small business owners strengthen a community; they support local charities; they hire your neighbors and friends, and keep Main Street thriving. But, beware, it may not last. Under the law, the Small Business Tax Deduction expires in less than eight years, but corporation tax cuts do not.
A bipartisan bill called the Main Street Tax Certainty Act has just been introduced in Congress which would change that, making sure small businesses permanently benefit from tax reform just like larger corporations. If passed, that will create stability and small businesses will continue to grow and prosper all over the state of Wisconsin. It is important that Congress pass this legislation.
Bill G. Smith is the state director of NFIB, an association with thousands of small business members members in Wisconsin
