PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Reflections on Tax Day 2019: Relief and Growth for Small Businesses, Opportunities for Improvement

By at 15 April, 2019, 11:05 am

NEWS

For Immediate Release

Washington, D.C. –  On this Tax Day, April 15, the Small Business & Entrepreneurship Council (SBE Council) praised many elements of the “Tax Cuts and Jobs Act” (TCJA) and outlined key areas for additional tax reform.  SBE Council president & CEO Karen Kerrigan said the big picture is growth, and that small businesses and entrepreneurs have greatly benefited from tax relief that sent more capital into the hands of consumers, businesses and investors.

“The economy continues to grow at a solid pace, and that did not happen by magic. Sensible regulatory policies and the boost provided by the ‘Tax Cuts and Jobs Act’ have played a big role in driving stronger economic growth, small business growth, and confidence,” said Kerrigan.

According to Kerrigan, various elements of the TCJA have buoyed the bottom lines and competitiveness of small businesses including: the 20% business income deduction (Section 199A), the lower 21% corporate rate for small business C corps, increased expensing limits (Section 179 increased from $500,000 to $1 million with the phase-out limit increasing from $2 million to $2.5 million, and temporary 100% bonus depreciation), expansion of the number of small business taxpayers eligible to use the cash method of accounting, a new tax credit for paid family and medical leave, a temporary increase in the estate tax exclusion, as well as measures that will encourage entrepreneurship and startups like opportunity zones and a stock option change that allows employees to defer taxes at option exercise or restricted stock unit vesting for up to 5 years. The latter will also help startups and small firms recruit are retain the skilled employees they need to grow.

“The new tax law was a great start. Small business finances are stronger, wages are higher, and consumers and entrepreneurs are more confident. Now is the time make the tax system even better for entrepreneurs and small businesses,” said Kerrigan.

Kerrigan listed several bills SBE Council is advocating for and supporting that would help simplify the tax system and create fairness and certainty for small business owners and entrepreneurs, including:

Small Business Owners’ Tax Simplification Act of 2019, a bipartisan bill that provides simple fixes and common-sense updates to the tax code to reduce costs, complexity and uncertainty.

Main Street Act Certainty Act of 2019, a bipartisan bill that would make permanent the 20% pass-through deduction enacted as part of tax reform. Small businesses are at risk of losing the deduction when it is scheduled to expire in 2026.

American Innovation Act, a bill that passed the House (but not the Senate) in the last Congress that would allow startups to fully deduct up to $20,000 of startup and organization costs (up from the current $5,000.) The bill is expected to be introduced in this Congress.

Taxpayers First Act, a bipartisan bill that passed the U.S. House on April 9 that would “redesign” the Internal Revenue Service (IRS) and make important changes to protect and better serve taxpayers.

“Obviously, there are additional provisions within TCJA that small businesses would like to see improved or made permanent. We continue to work with our friends in Congress to find ways to advance these provisions so that uncertainty does not impact economic growth or the confidence of entrepreneurs. In a competitive global environment, small businesses must continually improve and our policy environment needs to do the same. On tax policy, there are definitely improvements to be made with regard to simplification and relief and the good news on this Tax Day is that there is bipartisan support for doing just that,” concluded Kerrigan.

Contact: Karen Kerrigan, kkerrigan@sbecouncil.org

SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 25 years, SBE Council has worked on and advanced a range of private sector initiatives and public policy issues to strengthen the ecosystem for strong startup activity and small business growth. Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

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