Reauthorizing Pro-Growth Tax Provisions Will Energize American Small Business

By at 7 November, 2023, 1:12 pm


by Karen Kerrigan –  

Many of the pro-growth tax provisions included in the Tax Cuts and Jobs Act (TCJA) and related measures that small businesses have counted on for investment, growth and competitiveness are set to expire in the near future unless Congress takes action to extend them. In fact, some of the most important provisions for small businesses, including the R&D and manufacturing incentives, have already expired and need to be reauthorized immediately.

These tax incentives and key provisions included in the TCJA have helped to propel a period of economic resiliency and vibrancy. The provisions have helped to drive innovation, investment, and expand opportunities for entrepreneurs and their workforce. Failure to reauthorize these pro-growth policies will result in tax increases on innovators and job creators, hitting these firms during a difficult period where persistent headwinds – such as costly inflation and high interest rates – are bearing down, making it harder to compete and secure capital for productive projects and growth.

R&D expensing has been an important driver of innovation, encouraging small business owners and entrepreneurs to dedicate more resources toward innovation. This in turn benefits American consumers and workers, and ensures that the U.S. will remain the world leader in innovation. As our international adversaries grow more emboldened by the day, it is critical that the U.S. maintain our competitive advantage by preserving the smart policies that this tax credit embodies.

According to SBE Council’s tech survey this past summer, small business owners report that failure to extend immediate R&D expensing will undermine the health and competitiveness of their firms. Many will be forced to borrow money (will loans and capital be available?) and pare back their operations in order to absorb the financial punch. For example, 35% of small business owners report they will need to borrow money to pay higher taxes, and 19% report that their firm may go out of business. Other impacts include: holding off profit sharing for employees, less investment in future innovations, reduced hiring plans and employee benefits, and laying off employees. America’s startup ecosystem could be forever damaged if R&D expensing is not restored.

American workers and their families are also benefitting from provisions that protect American manufacturing. These provisions incentivize manufacturing facilities to purchase new, advanced equipment to be used in our factories, preventing companies from exporting these jobs overseas and making sure that critical manufacturing will remain here in America. Expensing provisions are especially important for small manufacturers, which happen to dominate this critical U.S. sector. According to the latest Census Bureau data (2020), 74.4% of manufacturers have fewer than 20 employees, and 93.1% have fewer than 100 employees.

The provisions are also designed to stimulate economic growth and development, expanding the tax base and setting the U.S. on a path to pay down its $33 trillion national debt. At the current rate, there are simply not enough taxes to raise and not enough spending to cut at the federal level to significantly reduce our national debt without doing greater harm to the national economy. We must prioritize growth and investment to expand the tax base if we hope to generate the revenue necessary to pay it down.

Congress must take urgent action on this issue to give small businesses greater certainty. The Small Business & Entrepreneurship Council urges members of Congress to swiftly pass a much-needed pro-growth incentive package that reauthorizes these important business provisions. We are confident that with pro-growth policies and actions the small business community will be able to navigate existing challenges and forge forward in driving America’s Main Street economy and innovative startup ecosystem.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.


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