New EY macroeconomic analysis, NFIB survey of small business owners illustrate impacts of potential massive tax hike on small businesses
FOR IMMEDIATE RELEASE
HARTFORD, CT (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 federal 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.
In Connecticut, 14,000 new jobs will be created each year for the first 10 years, and 26,000 new jobs annually every year after that.
“This study demonstrates the positive impact the Small Business Deduction has on Connecticut’s small businesses and why it’s so important that Congress makes it permanent,” said Andy Markowski, NFIB Connecticut State Director. “The deduction allows Connecticut small business owners to invest in their communities, employees, and businesses, which only strengthens our local economy. We urge our federal lawmakers to support the Main Street Tax Certainty Act to make the Small Business Deduction permanent and avoid a massive tax hike on Connecticut’s small business community.”
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.
“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.
Learn more at smallbusinessdeduction.com.
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For 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is nonprofit, nonpartisan, and member-driven. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses, and remains so today. For more information, please visit nfib.com.
