It would give small businesses the predictability they need to play for the future
Business First of Louisville on Friday published NFIB State Director Tom Underwood’s op-ed on the need to make the 20% small business deduction permanent. The federal tax deduction is scheduled to expire in 2025.
By TOM UNDERWOOD
Kentucky’s small businesses will see a big increase in their federal taxes unless Congress sets its differences aside long enough to stop it.
This is a problem we knew was coming. Back in 2017, Congress cut taxes on America’s businesses, but Wall Street’s tax cuts are permanent. Main Street’s aren’t, and they’re set to expire in a little over a year.
That’s why Kentucky’s small businesses are urging the state’s entire congressional delegation to come together and support the bipartisan Main Street Tax Certainty Act. Without it, local businesses will be hit with a 20 percent tax hike overnight.
Most small businesses couldn’t afford a big tax increase like that in the best of times, and these are hardly the best of times. Inflation is still driving up the cost of running a small business. If this 20 percent small business deduction is allowed to expire, some local businesses may be forced to close.
Congress included this deduction in the original bill to help local businesses compete with national chains, create jobs, and support their communities.
Congress, though, set this 20 percent deduction to expire on New Year’s Eve, 2025.
Small business owners need stability. They don’t have it right now, and that creates uncertainty. The NFIB Small Business Optimism Index rose 2.2 points in July to 93.7, the highest reading in over two years, but it was still the 31th consecutive month that the index was below the 50-year average.
Passing the Main Street Tax Certainty Act would let Congress stop the cycle of uncertainty caused by temporary extensions. It would give small business owners the predictability they need to plan for the future and grow their businesses.
The Main Street Tax Certainty Act enjoys the support of both Democrats and Republicans on Capitol Hill, but only four of Kentucky’s six U.S. representatives have agreed to co-sponsor the bill – Andy Barr, James Comer, Brett Guthrie, and Hal Rogers. Rand Paul is a co-sponsor in the Senate.
That’s good, but it’s not enough.
Kentucky’s economy is built on its small businesses. According to the U.S. Small Business Administration, small businesses account for 99 percent of all businesses in the commonwealth. Small businesses help our economy by creating jobs and giving to local charities and civic organizations. Small businesses are essential to have a strong, diverse economy, but running a small business isn’t easy. Small businesses operate on razor-thin profit margins. Inflation already is taking a toll on many of Kentucky’s local businesses. The pandemic forced many small business across the state to close. A 20 percent increase in their federal taxes could put more of them out of business.
We can’t let that happen. We need our entire congressional delegation to make the small business deduction permanent by supporting the Main Street Tax Certainty Act. We need to tell our elected leaders what Main Street means to Kentucky’s economy and America’s economy. We need them to understand that by helping small businesses, they’ll help all of us.
