PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

SBE Council Letter to U.S. Senate Opposing the “Inflation Reduction Act”

By at 7 August, 2022, 8:42 am

“Inflation Reduction Act” Reduces Investment, Innovation, Job Growth & Productivity

U.S. Entrepreneurs and Small Businesses Will Be Harmed

 

Dear Member of the United States Senate:

The Small Business & Entrepreneurship Council (SBE Council) strongly opposes “The Inflation Reduction Act” (IRA). The title of the legislation belies what it will actually do, as both common sense and the Congressional Budget Office convey that the package will have “a negligible” – if any – positive effect on inflation. In fact, the “IRA” could do the opposite, as businesses will be less inclined and incentivized to invest and therefore supply will be inhibited. Small businesses will be harmed by this outcome as well as the overall uncertainty and adverse effects that will result from many provisions in the package.

For example, powering up the Internal Revenue Service (IRS) means small businesses and the self-employed will be swarmed by 87,000 new agents. While supporters of the “IRA” claim the vast new resources provided by the bill will go after wealthy taxpayers, tax data consistently shows that small business owners of moderate means are targeted most frequently. That will not change.

Obviously, this will be a massive burden on many small business owners, who will be forced to endure lengthy audits. Some will be forced to bring in expensive counsel and support, which means fewer resources to invest in their business, their workers and their communities.  The productivity suck and anxiety this inflicts on entrepreneurs are heavy burdens. Dealing with crushing inflation and the economic downturn is unbearable enough for small business owners, without having this type of threat hanging over their heads.

Small business owners are fair and do believe government agencies should have adequate resources to properly do their jobs. But, these agencies need to show that they are operating effectively with the resources they have. With less than 25% of taxpayer calls being answered by IRS staff, and the mounting problems uncovered at the agency – such as the destruction of taxpayer documents and returns and the leaking of private taxpayer information – the agency needs to demonstrate that it can operate fairly and properly with the resources it has.  Resources would be better spent on helping small business comply and with taxpayer assistance, but only a tiny fraction – 4% – of the $80 billion proposed in the “IRA” is dedicated to supporting taxpayers.

The tax increases, price controls, new spending – and, ironically, various tax credits – are negatives, not positives, for our economy and small businesses. Placing price controls on drugs will vastly harm the biopharmaceutical-innovative ecosystem, which is dominated by small to mid-size businesses that count on policy consistency to drive investment and risk-taking. Moreover, consumers will suffer from fewer drug and treatment breakthroughs, which means America’s leadership in this critical arena will suffer.

Small businesses and entrepreneurs succeed with pro-growth policies that enable investment and risk-taking. The “IRA” hardens government control over key areas of the economy and siphons private capital from productive businesses. This is not legislation that will help our businesses navigate through inflationary pressures, supply chain headaches, the great labor mismatch and an economy in recession.

We urge you to oppose the “Inflation Reduction Act” and work on productive policies that will boost entrepreneurs and all U.S. businesses, not saddle them with more costs, taxes, audits and economic hardship.

Please contact me if you have questions.

Sincerely,

Karen Kerrigan, President & CEO

 

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