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COLUMN: Make the 20% Small Business Deduction Permanent

COLUMN: Make the 20% Small Business Deduction Permanent

November 5, 2024

News

COLUMN: Make the 20% Small Business Deduction Permanent

NFIB member Tina Miller writes in the Richmond Times Dispatch that the deduction helps Main Street

NFIB member Tina Miller of Lexington writes in today’s edition of the Richmond Times-Dispatch that small businesses will see a massive tax increase in 2025 unless the next president and Congress make the 20% Small Business Deduction permanent.

Miller, who owns Walkabout Outfitter in Lexington, writes:

“No matter who wins, next year will see the expiration of the biggest small business tax cut in American history — a tax cut that has enabled my small business to grow, thrive and survive the ravages of the pandemic and the past few years. If the next president and Congress don’t save this tax cut as soon as possible, we’ll face a massive tax hike that could even force us to close.”

Read the full guest editorial below:

By TINA MILLER

 

Will my American dream die next year? How about the dreams of millions of small business owners across Virginia and the rest of the country?
This is all I can think about heading into the election. No matter who wins, next year will see the expiration of the biggest small business tax cut in American history — a tax cut that has enabled my small business to grow, thrive and survive the ravages of the pandemic and the past few years. If the next president and Congress don’t save this tax cut as soon as possible, we’ll face a massive tax hike that could even force us to close.
The tax cut in question is the small business deduction from the 2017 tax cut law. It lets the vast majority of small businesses deduct 20% of our business income on our annual tax returns. That single reform helps us compete with big businesses, which only have a 21% corporate tax rate and armies of lawyers and accountants who find other tax loopholes. But while Wall Street companies have a permanent rate, Main Street’s tax cut is temporary, lasting only through 2025. If that’s not unfair — even unjust — I don’t know what is.
To be clear, the deck has been stacked against small business since my husband and I started our outfitting company in Lexington in 2005 — the same year we got married. We were shocked to find out how much we had to pay in taxes. In fact, until the 2017 law, we often paid more in taxes than we paid ourselves. But we kept at it, because we love running a small business. It really is the definition of the American dream, difficulties and all.
Thankfully, the small business deduction made things easier. While it didn’t create a truly level playing field with big business, it did help us compete much more effectively. After the law passed, the tax savings helped us stop taking out loans to cover our annual taxes, which we’d done a few times. We also had enough money to give our workers more raises and hire another person to help coordinate inventory between our six stores.
That’s the point of this tax cut: It helps create jobs and boost wages. Every small business wants to do that. The small business deduction ensures we can.
But its real power became clear during and after the pandemic. Those savings gave us just enough money to survive after the government shut down the economy. And once inflation began to hit us, the tax cut was absolutely essential in helping us keep our team’s wages ahead of rising prices.
The bottom line is that this tax cut has helped us move forward. But if it’s taken away next year, we’ll face a massive tax hike that will hold us back. Increasing wages will be harder. Benefits will be harder to cover. Stocking our shelves will be harder as suppliers raise prices. And all the while, our big business competitors will pull ahead because they have permanent relief.
Could we even continue to stay in business? A tax hike like this could quickly become the straw that breaks the camel’s back. Honestly, running a small business already feels like fighting the government every day, between the nonstop barrage of regulations and taxes. If our taxes go back to their pre-2017 highs, that fight could become too costly and time-consuming. Everything is already more expensive than it was seven years ago. Take away our savings, and how are we supposed to make ends meet?
I’m incredibly disappointed that Congress hasn’t already made the small business deduction permanent. There’s bipartisan support, but no action. Every politician in both major parties — including everyone running for office this year — says they support small business. Do they really mean it? As a minority woman small business owner, I’m asking them to prove it as soon as they take office in January. They must give Main Street permanent relief. The American dream is on the line.
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