REPORT: Arkansas Jobs, Economic Growth at Stake if 20% Small Business Tax Deduction Expires

September 18, 2024

New EY macroeconomic analysis, NFIB report of small business owners illustrates impacts of potential massive tax hike on small businesses.

REPORT: Arkansas Jobs, Economic Growth at Stake if 20% Small Business Tax Deduction Expires

LITTLE ROCK (Sept. 18, 2024) – The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, released two new impactful reports regarding the 20% Small Business Tax Deduction, which is scheduled to expire at the end of next year. The reports illustrate what will happen to the small business economy if Congress makes the 20% Small Business Deduction permanent or if it fails to act. The Ernst & Young (EY) macroeconomic analysis, released in conjunction with NFIB, measured the impact on small business of permanently extending the 20% Small Business Deduction. The analysis concluded that small businesses would flourish by making the deduction permanent, creating 1.2 million new jobs each year for the first ten years and 2.4 million annually every year thereafter. It would also result in a $750 billion GDP increase in the small business sector over the first ten years, and a $150 billion increase annually after that. Without an extension, those benefits to small businesses and the broader economy would be lost.

Specifically in Arkansas, the analysis estimates that making the deduction permanent would create 10,000 new jobs each year for the first ten years, and 20,000 annually every year thereafter. (See more state-specific data beginning on pg. 7)

The analysis also found that 33 million small pass-through businesses employ more than 68 million workers in the United States. Of those 33 million small pass-throughs, 25.9 million claimed the deduction in 2021. The 2024 NFIB Tax Survey assessed small business owners’ biggest tax challenges, implications of potential changes to the tax code, and how tax policy impacts business operations. Most notably, 59% of small business owners reported that eliminating the 20% Small Business Deduction would have a negative impact on their business, with 61% reporting they would likely raise prices, 44% reporting they would postpone or cancel capital investments, and 36% reporting they would postpone or cancel hiring additional employees. “These studies underscore just how crucial the 20% Small Business Deduction is to our Main Street employers,” NFIB State Director Katie Burns said. “Small businesses are the foundation of our national and local economy. The 20% Small Business Deduction has made it easier for small, and family-owned businesses here in Arkansas to raise wages, purchase new equipment, and expand their operations. In this challenging economic environment, Congress must stop the massive tax hike on small businesses and pass the Main Street Tax Certainty Act.” “By allowing small business owners to keep more of their hard-earned money, the 20% Small Business Deduction empowers middle class small business owners to grow their businesses, hire employees and raise wages, and give back to their communities,” said NFIB President Brad Close. “If the deduction is allowed to expire at the end of next year, millions of small businesses will face a massive tax hike. It is crucial that Congress and the Administration take a strong stand for local small businesses and make the Small Business Deduction permanent.” CLICK HERE to read the 2024 EY Small Business Deduction Macroeconomic Analysis. CLICK HERE to read the 2024 NFIB Tax Survey.

Background:

The 20% Small Business Deduction was created as a part of the 2017 tax law to level the playing field between small businesses and larger corporations. It has empowered small business owners to overcome the economic challenges of the last few years – but it’s set to expire at the end of 2025. The Main Street Tax Certainty Act would make the 20% Small Business Deduction permanent and avoid a massive tax hike on a majority of America’s small businesses. Learn more at www.SmallBizDeduction.com

Topics:

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State:

Arkansas

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